How much to set aside for income tax

Shybride2016

Hi all,

Recently started as a contractor and will need to register for income tax. Is there a rough way to estimate how much I need to set aside to cover my income tax bill next year? I'll be earning in and around the same amount each month.

Thanks in advance.

Squatter

Shybride2016 wrote: »

Hi all,

Recently started as a contractor and will need to register for income tax. Is there a rough way to estimate how much I need to set aside to cover my income tax bill next year? I'll be earning in and around the same amount each month.

Thanks in advance.

Bearing in mind that you'll be liable for Income Tax @ 20% (or 40% if you're doing very well) plus USC at 5% and PRSI @4%, if you can manage to put aside 20 to 25% of your net monthly income (after expenses) then you should be grand!

Mrs OBumble

If you're contracting then most of your income should be taxable at 40%.

(If you're so bad that you make less than 60k as a contractor, you shouldn't be contracting. )

Set aside 50% and you'll have plenty left over.

Don't forget that in year 2 you'll need to pay tax for the year before and preliminary tax for the whole year by October.

Shybride2016

Mrs OBumble wrote: »

If you're contracting then most of your income should be taxable at 40%.

(If you're so bad that you make less than 60k as a contractor, you shouldn't be contracting. )

Set aside 50% and you'll have plenty left over.

Don't forget that in year 2 you'll need to pay tax for the year before and preliminary tax for the whole year by October.

No idea how to multi quote but thank you both for your replies, very helpful.

Your post made me laugh so much Mrs OBumble! My contracting is only part-time so definitely won't be reaching anywhere near 60k. I also work term-time as a PAYE worker so will have two jobs. Still nowhere near 60k combined but a great life/work balance which I've been searching for for a long time so that'll do me!!

Thanks again to you both for replying so quickly. Much appreciated!

CPTM

Don't forget about the salary calculators online. "Salary calculator Ireland" is how I find them. I can't post the link for some reason. They give a breakdown of the different taxes. Maybe work out how much you might need to set aside for the accountant too so that there's no surprises.

SEPT 23 1989

Get a good accountant it really pays off

ebbsy

SEPT 23 1989 wrote: »

Get a good accountant it really pays off

The best advice.