Tax on additional income

kevincool

Hi,
I am a software programmer and PAYE worker. I do some work out of office hours which earns me about 6K a year. If I declare this as an additional income how much will it go for tax considering my PAYE pay is above 45K?
I dont charge tax to my additional income clients. Should I start charging them since i am declaring the additional income tax?

Thanks in advance for your replies.

relax carry on

kevincool wrote: »

Hi,
I am a software programmer and PAYE worker. I do some work out of office hours which earns me about 6K a year. If I declare this as an additional income how much will it go for tax considering my PAYE pay is above 45K?
I dont charge tax to my additional income clients. Should I start charging them since i am declaring the additional income tax?

Thanks in advance for your replies.

40% income tax, 5% USC and 4% PRSI. And it's when you declare it, not if as it's not voluntery. You can try to factor in how much tax you are due to pay and increase your prices accordingly but will that make you too expensive to your clients? A chat with an accountant is in order. Is the 6000 gross and are you deducting allowable
business expenses to arrive at your net taxable income?

kevincool

Thanks for your reply. It is gross and I am not deducting any expenses. I need to think about what expenses I could deduct.
Usually I charge them 60 euros per hour. Can I charge them 60 + 12.5% tax? They should be OK with it.

Peregrinus

I wouldn't tell them I'm charging 60 euro + 12.5% tax; that would just piss them off. Tell them you're charging 67.50. They don't care how much of this goes towards your tax liabilities.

Might be worth talking to an accountant about what deductions and expenses you can claim, and how best to arrange your affairs to minimise your tax liablities, and then decide what you need to be charging your clients in order to make the activity financially attractive to you. Also you probably should get advice about how best to approach the matter of accrued liablities for income you have already earned from this source, but have not up to now declared. Depending on how long you've been carrying on this activity you may be in default, and you will need to sort that out.

MFS2

I would agree with Peregrinus above. Factor in the estimated tax into your charge to your clients but you should get your affairs up to date. It's amazing how quick time passes and before you know it, you owe tax plus interest and potential penalties.

jjjd

kevincool wrote: »

Thanks for your reply. It is gross and I am not deducting any expenses. I need to think about what expenses I could deduct.
Usually I charge them 60 euros per hour. Can I charge them 60 + 12.5% tax? They should be OK with it.

You would need to be registered for VAT with Revenue before you started charging VAT on your sales.

MFS2

jjjd wrote: »

You would need to be registered for VAT with Revenue before you started charging VAT on your sales.

I don't think OP was talking about VAT. He's under the threshold in any event.

jjjd

MFS2 wrote: »

I don't think OP was talking about VAT. He's under the threshold in any event.

He mentioned charging tax on sales - I assumed he meant VAT. Anyway you can elect for VAT registration even below the threshold. Useful if you want to reclaim the VAT on purchases and your customers are VAT registered anyway.

MFS2

jjjd wrote: »

He mentioned charging tax on sales - I assumed he meant VAT. Anyway you can elect for VAT registration even below the threshold. Useful if you want to reclaim the VAT on purchases and your customers are VAT registered anyway.

Very true.

gerrybbadd

jjjd wrote: »

He mentioned charging tax on sales - I assumed he meant VAT. Anyway you can elect for VAT registration even below the threshold. Useful if you want to reclaim the VAT on purchases and your customers are VAT registered anyway.

Might be worth mentioning that you can only reclaim VAT on trade related expenses, not on everything!

kevincool

Thanks for all your replies.

Can I do this tax filing once a year after December?

If my additional income is paid to my friends account then how can revenue know that I am getting additional income under my name?

Does banks report to revenue additional income coming in other than PAYE?

kevincool

jjjd wrote: »

He mentioned charging tax on sales - I assumed he meant VAT. Anyway you can elect for VAT registration even below the threshold. Useful if you want to reclaim the VAT on purchases and your customers are VAT registered anyway.

I Provide consultancy services. Can I charge VAT on this?

So If I am paying 50% in tax approx and I charge 12.5 % in VAT then

I pay just 37.5 % in tax actually.

I need to get some professional advice on this!:(

relax carry on

kevincool wrote: »

I Provide consultancy services. Can I charge VAT on this?

So If I am paying 50% in tax approx and I charge 12.5 % in VAT then

I pay just 37.5 % in tax actually.

I need to get some professional advice on this!:(

Time to get professional advice as you are all over the place with this. Also what you suggested with your friends bank account and hiding the income is tax evasion. Do not compound things, just seek professional advice tomorrow.

kevincool

relax carry on wrote: »

Time to get professional advice as you are all over the place with this. Also what you suggested with your friends bank account and hiding the income is tax evasion. Do not compound things, just seek professional advice tomorrow.

I don't want to evade tax, just trying to understand how Revenue operates.

Doing lots of research on this currently. Will soon contact an accountant.

BorneTobyWilde

This is all very silly and it's a tiny sum. Do you think the revenue give a toss when a Taxi driver gets a 50 euro tip from some well off tourist. Does that taxi driver put the boot down and head to the tax office, run in as fast as he can and say '' hey look, 50 euro, what paper work do I need to declare this''
I'm sorry but what you are doing is so small that it's just not worth your time or revenues time to deal with it. Does a waitress declare her tits ?

kevincool

BorneTobyWilde wrote: »

This is all very silly and it's a tiny sum. Do you think the revenue give a toss when a Taxi driver gets a 50 euro tip from some well off tourist. Does that taxi driver put the boot down and head to the tax office, run in as fast as he can and say '' hey look, 50 euro, what paper work do I need to declare this''
I'm sorry but what you are doing is so small that it's just not worth your time or revenues time to deal with it. Does a waitress declare her tits ?

So do you feel that earning 6k more every year as additional income is not worth to file tax?

barneystinson

BorneTobyWilde wrote: »

This is all very silly and it's a tiny sum. Do you think the revenue give a toss when a Taxi driver gets a 50 euro tip from some well off tourist. Does that taxi driver put the boot down and head to the tax office, run in as fast as he can and say '' hey look, 50 euro, what paper work do I need to declare this''
I'm sorry but what you are doing is so small that it's just not worth your time or revenues time to deal with it. Does a waitress declare her tits ?

It's all relative. 3k of tax (50% of 6k) may be a tiny sum to you, but take it over 4 years - which Revenue most likely would - and add on interest >10% p.a. and a 75% penalty. Is 25k a tiny sum?

Frynge

BorneTobyWilde wrote: »

Does a waitress declare her tits ?

Where is this restaurants?


But realistically the sums are probably not worth revenues time.

BorneTobyWilde

kevincool wrote: »

So do you feel that earning 6k more every year as additional income is not worth to file tax?

If you are working for cash and not giving receipts then you're no different than an Escort.
What I am saying is 1000's of people in Ireland, UK, Europe work and receive cash, from Taxi drivers, to waiters and waitress in tips so on, Escorts, Handy Men. What is making you so different?
You seem very worried about the people at the top who are playing them system and paying zero tax. You have a job you pay tax, can you not leave it at that.

km991148

BorneTobyWilde wrote: »

Does a waitress declare her tits ?

Guess it depends if the tits were a business expense? Maybe they are a requirement of the job?

Seriously though - might be small amounts nom but if you start to grow the consultancy work, you may end up in trouble quite quickly.

Phone a couple of accountants, get some general advice then decide how you want to set things up.

jimmycrackcorm

kevincool wrote:

Hi, I am a software programmer and PAYE worker. I do some work out of office hours which earns me about 6K a year. If I declare this as an additional income how much will it go for tax considering my PAYE pay is above 45K? I dont charge tax to my additional income clients. Should I start charging them since i am declaring the additional income tax?

Think about putting it all into your pension. No tax.

Spanish Eyes

Be very aware that if you declare self employed income, even though you may have contributed all the way through PAYE and PRSI concurrently, you will not be entitled to Jobseeker Benefit based on your contributions if the need applies. That's just because you are deemed to be self employed in DSP eyes.

Jobseeker Allowance may apply, although that is means tested, the other is not.

Just be careful out there.

kevincool

km991148 wrote: »

Guess it depends if the tits were a business expense? Maybe they are a requirement of the job?

Seriously though - might be small amounts nom but if you start to grow the consultancy work, you may end up in trouble quite quickly.

Phone a couple of accountants, get some general advice then decide how you want to set things up.

Yes, eventually after couple of years I want to setup my own consultancy. This is all ground work for it. I will be on the right side on tax. Just that 50% goes to tax hurts.

kevincool

Spanish Eyes wrote: »

Be very aware that if you declare self employed income, even though you may have contributed all the way through PAYE and PRSI concurrently, you will not be entitled to Jobseeker Benefit based on your contributions if the need applies. That's just because you are deemed to be self employed in DSP eyes.

Jobseeker Allowance may apply, although that is means tested, the other is not.

Just be careful out there.

This will be the last thing I will be worried about but thanks for letting me know.

BorneTobyWilde

barneystinson wrote: »

It's all relative. 3k of tax (50% of 6k) may be a tiny sum to you, but take it over 4 years - which Revenue most likely would - and add on interest >10% p.a. and a 75% penalty. Is 25k a tiny sum?

I know what you are saying, all I am saying is it's impossible to keep track of cash in this country and any country. No one is up in arms over the fact a huge about of people get paid cash and do their own accounts and pay their tax.
Do they declare every last dime, no.
A waitress in a busty restaurant in a big city could make a 50 a day in coins or petty cash, fivers so on. Every ten days she make 500 in tips, hardly something to run to revenue about. It's life, the sun will still come up tomorrow and she will spend it and economy get simulated.

Peregrinus

BorneTobyWilde wrote: »

This is all very silly and it's a tiny sum. Do you think the revenue give a toss when a Taxi driver gets a 50 euro tip from some well off tourist. Does that taxi driver put the boot down and head to the tax office, run in as fast as he can and say '' hey look, 50 euro, what paper work do I need to declare this''
I'm sorry but what you are doing is so small that it's just not worth your time or revenues time to deal with it.

As others have pointed out, it certainly is. 6k a year over a few years can build up to quite a liablity, when arrears and penalties are added on. It's likely that his customers, or some of them, are claiming the sums paid to him as tax deductions in their business, meaning that if any of his customers are audited, there'll be a paper trial of payments to him. This is not something the OP should be sticking his head in the sand about.

BorneTobyWilde wrote: »

Does a waitress declare her tits ?

I'm not going near that one.

BorneTobyWilde wrote: »

A waitress in a busty restaurant . . .

Once may be a typo; twice is Freudian.

MFS2

BorneTobyWilde wrote: »

This is all very silly and it's a tiny sum. Do you think the revenue give a toss when a Taxi driver gets a 50 euro tip from some well off tourist. Does that taxi driver put the boot down and head to the tax office, run in as fast as he can and say '' hey look, 50 euro, what paper work do I need to declare this''
I'm sorry but what you are doing is so small that it's just not worth your time or revenues time to deal with it. Does a waitress declare her tits ?

Declare her what?