Does maternity leave impact tax credits?

Isolt

I left my job last year after my maternity leave ended. I have recently started a new job and my new boss commented on how I have less tax credits that he would have expected. What does this mean? And why would it be?

Stheno

Maternity benefit is tax deductible.

It counts as taxable income.

I'm moving this to the taxation forum for you.

Isolt

Stheno wrote: »

Maternity benefit is tax deductible.

It counts as taxable income.

I'm moving this to the taxation forum for you.

I'm so sorry, I didn't know there was a taxation forum. Opps!

Hopefully someone there can explain this to me. Thanks

Stheno

Isolt wrote: »

I'm so sorry, I didn't know there was a taxation forum. Opps!

Hopefully someone there can explain this to me. Thanks

No worries

How long were you on maternity leave and receiving maternity benefit from Social Welfare this year?

Mod: Thread moved from work and jobs, taxation forum now applies.

Lockedout2

If you left your job then the tax office may have assigned your credits to your husband.

So you have the €24k standard rate cut off and €1650 PAYE Tax Cr rather than €33,800 and €3,300. But it all adds up to the same at the end of the year.

Might be worth while checking on a balancing statement for last year.

Isolt

I was on maternity leave for 26 weeks up until March 15'. I worked then until July and then lost that job.
I was on JSB and then JSA for approx 12 months thereafter and have found a great job now that I am delighted with!

Stheno

Isolt wrote: »

I was on maternity leave for 26 weeks up until March 15'. I worked then until July and then lost that job.
I was on JSB and then JSA for approx 12 months thereafter and have found a great job now that I am delighted with!

That complicates things slightly.

JSB and maternity benefit are treated as taxable income, so essentially it's like pay you would earn in that tax credits are applied against it when you go back to work.

So for about three months of this year, you got JSB which the Revenue will then use to deduct the right amount of credits from your overall credits when you go back to work which reduces your overall credits.

Also if you are married check yours husbands payslip, and post up your credits per week month and his, that is an easy and non privacy invading for us to tell you if you are both getting the full basic credits you should be, or to calculate if they are adjusted on the basis of your maternity leave. If you are equally assessed you should both get 3300 per year, or 275 per month or 63.56 per week.

With job seekers benefit, 63.56*5 = 317 per week, on 188 per week, it would be a reduction of 37.5 per week in your tax credits for each week you were on jsb, so if you were on jsb for 12 weeks, then your overall credits now would be reduced from 3300 per year, to 2848 per year, 237.4 per month, or 54.78 per week

Isolt

Stheno wrote: »

With job seekers benefit, 63.56*5 = 317 per week, on 188 per week, it would be a reduction of 37.5 per week in your tax credits for each week you were on jsb, so if you were on jsb for 12 weeks, then your overall credits now would be reduced from 3300 per year, to 2848 per year, 237.4 per month, or 54.78 per week

Thanks Stheno, that makes perfect sense as he did say he was expected to see around 3000 and instead saw a figure like 2800.
I am not married so don't think that is a factor.

Now excuse my stupid question but I don't really understand tax credits. Does this mean my take home pay will be significantly lower than expected?

exaisle

There are no stupid questions....

Your take home over the course of the remainder of the year will be about 200 lower (in total).

As a matter of course, you should request a Balancing statement at the end of the year anyhow and claim for any unreimbursed medical expenses etc...

Isolt

exaisle wrote: »

There are no stupid questions....

Your take home over the course of the remainder of the year will be about 200 lower (in total).

As a matter of course, you should request a Balancing statement at the end of the year anyhow and claim for any unreimbursed medical expenses etc...

Thanks a million, I will do that!

Stheno

Isolt wrote: »

Thanks Stheno, that makes perfect sense as he did say he was expected to see around 3000 and instead saw a figure like 2800.
I am not married so don't think that is a factor.

Now excuse my stupid question but I don't really understand tax credits. Does this mean my take home pay will be significantly lower than expected?

Excuse me if this is overly simplistic, but the way tax credits work is they give you a credit to apply to your tax bill.

So if you warn 100 euro, you pay 20% tax on it all, so 20 euro, but if you have a 20 euro tax credit, then you pay nothing.

As the poster above me said, it shouldn't have a massive impact, probably 10-15 euro per week less than you may have expected.