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Taxed on maternity pay?

  • 08-01-2017 1:44pm
    #1
    catrionanic
    Registered Users, Registered Users 2 Posts: 2,091 ✭✭✭


    Hi all, hope the bumps are doing well!

    Got my first mat payment there on Friday (mat leave officially starts on Monday). I was expecting to be taxed on it, but have received the full €230. Is this a mistake? Or is it something to do with the tax year being Jan-Jan and hence my earnings are so low for 2017 that I'm exempt from the tax on it so far?

    Trying to budget for the next six months and am more confused than ever now!


Comments

  • #2
    happypants
    Registered Users, Registered Users 2 Posts: 280 ✭✭happypants


    catrionanic wrote: »
    Hi all, hope the bumps are doing well!

    Got my first mat payment there on Friday (mat leave officially starts on Monday). I was expecting to be taxed on it, but have received the full €230. Is this a mistake? Or is it something to do with the tax year being Jan-Jan and hence my earnings are so low for 2017 that I'm exempt from the tax on it so far?


    Trying to budget for the next six months and am more confused than ever now!


    I think you get taxed on the maternity pay your employer gives you to top up your wage. (if this is the case)


    Women in my job were getting their wage minus €230 per week from our employer and none of it taxed. So they were actually getting almost their gross pay whilst on mat leave. No more tho now we are taxed!


  • #3
    Pawwed Rig
    Moderators, Category Moderators, Home & Garden Moderators, Recreation & Hobbies Moderators Posts: 22,430 CMod ✭✭✭✭Pawwed Rig


    You will be taxed by your payroll. DSP do not withhold tax


  • #4
    catrionanic
    Registered Users, Registered Users 2 Posts: 2,091 ✭✭✭catrionanic


    Pawwed Rig wrote: »
    You will be taxed by your payroll. DSP do not withhold tax

    So basically I'll receive €230 per week untaxed for the 26 weeks, and then pay back the tax I should have paid on that once I'm back in work again?

    So you actually pay a bit more tax when you return to work, to make up for the maternity pay you hasn't been taxed at all on in those 26 weeks?


  • #5
    Pawwed Rig
    Moderators, Category Moderators, Home & Garden Moderators, Recreation & Hobbies Moderators Posts: 22,430 CMod ✭✭✭✭Pawwed Rig


    Is your employer not operating payroll while you are on maternity leave?


  • #6
    catrionanic
    Registered Users, Registered Users 2 Posts: 2,091 ✭✭✭catrionanic


    Pawwed Rig wrote: »
    Is your employer not operating payroll while you are on maternity leave?

    I'm self-employed but have enough stamps to qualify for mat leave. So I'll be submitting my own tax return.


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  • #7
    beechwood55
    Registered Users, Registered Users 2 Posts: 532 ✭✭✭beechwood55


    I would expect in that case that when you submit your tax return for the relevant year it will show an underpayment of tax.


  • #8
    Pawwed Rig
    Moderators, Category Moderators, Home & Garden Moderators, Recreation & Hobbies Moderators Posts: 22,430 CMod ✭✭✭✭Pawwed Rig


    beechwood55 wrote: »
    I would expect in that case that when you submit your tax return for the relevant year it will show an underpayment of tax.

    Exactly this. You declare it on your Form 11 and you are taxed on it at your marginal rate. It is not liable to USC or PRSI.


  • #9
    catrionanic
    Registered Users, Registered Users 2 Posts: 2,091 ✭✭✭catrionanic


    Pawwed Rig wrote: »
    Exactly this. You declare it on your Form 11 and you are taxed on it at your marginal rate. It is not liable to USC or PRSI.

    So basically I'll owe about €1200 in tax (20% of 26 weeks mat pay of €230) at the end of the year, assuming I remain in the lower tax-rate band (which I will)? Ignoring any tax credits of course. I'll need to budget for this as I go then.


  • #10
    Stheno
    Moderators, Business & Finance Moderators, Science, Health & Environment Moderators, Society & Culture Moderators Posts: 51,690 Mod ✭✭✭✭Stheno


    catrionanic wrote: »
    So basically I'll owe about €1200 in tax (20% of 26 weeks mat pay of €230) at the end of the year, assuming I remain in the lower tax-rate band (which I will)? I'll need to budget for this as I go then.

    You need to factor in your tax credits!


  • #11
    waterfaerie
    Registered Users, Registered Users 2 Posts: 513 ✭✭✭waterfaerie


    It happened to me last year. I got the 230 every week and got my normal salary from my employer, minus the 230. I thought nothing of it until, at the end of the year, my employer did my tax adjustment for the year. I got paid a tiny fraction of my normal pay the week before Christmas, totally unexpected. It's ridiculous as my employer is another govt. department so there's no excuse for them not having it run smoother than that. I just assumed they were taxing me correctly for the 26 weeks, taking it into account. Anyway, since you're self employed I imagine you will have more control over it. It is taxable anyway, that's for certain.


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  • #12
    Anne_cordelia
    Registered Users, Registered Users 2 Posts: 446 ✭✭Anne_cordelia


    catrionanic wrote: »
    So basically I'll owe about €1200 in tax (20% of 26 weeks mat pay of €230) at the end of the year, assuming I remain in the lower tax-rate band (which I will)? Ignoring any tax credits of course. I'll need to budget for this as I go then.

    It depends on your annual income. You might have enough tax credits if your income for the rest of the year is low (especially if you take the full 6 months or more off) so that you might not have to pay tax on the 230. Do you have an accountant? If so ask them to help you project your 2017 income to help budget. You should work out what your projected total income for 2017 will be and put it into a tax calculator if you don't have an accountant.


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