Tax on social welfare payments if no P21 requested?

xxxSedgexxx

Hello,

As you are likely aware, social welfare payments are paid gross, but are actually taxable. This may result in a person owing tax to revenue after year end if/when requesting a P21.

Question: If a person does not request a P21 after the end of the tax year, does this mean revenue will not come claiming the tax owed?

Thanks.

banie01

xxxSedgexxx wrote: »

Hello,

As you are likely aware, social welfare payments are paid gross, but are actually taxable. This may result in a person owing tax to revenue after year end if/when requesting a P21.

Question: If a person does not request a P21 after the end of the tax year, does this mean revenue will not come claiming the tax owed?

Thanks.

No, put plainly any tax owed will be grossed up and carried forward to the next tax year and collected via adjusting subsequent years tax credits.
While you may claim back tax overpayment for the 4 years previous, Revenue will follow any funds owed to them for far longer.

screamer

If you are or were working then your employer should handle that element of tax and deduct what is owed.
revenue are informed of what you've been paid by welfare and if you go back to work they will reduce your tax credits by the tax owed straight out and also your standard rate cut off point will be reduce. They'll likely also place you in a week 1 basis. In short they'll cripple you with tax for the first year after returning to work.

wiggle16

screamer wrote: »

If you are or were working then your employer should handle that element of tax and deduct what is owed.
revenue are informed of what you've been paid by welfare and if you go back to work they will reduce your tax credits by the tax owed straight out and also your standard rate cut off point will be reduce. They'll likely also place you in a week 1 basis. In short they'll cripple you with tax for the first year after returning to work.

They won't "cripple" you with tax. They will simply collect what is owed by reducing credits. If the OP is in a job in January then they will not be on a week 1 for the year - if the OP were put on a week 1 then the tax owed would never be collected.

Any PAYE underpayment is collected at a maximum of €1000 per year over four years unless some other arrangement is made. €1000 divided by 52 weeks = @€;19 a week in reduced credits. I'm on a low wage myself but I wouldn't call this a "crippling" amount of tax.

So if the OP goes back to work Revenue will reduce his/her credits straight out... but they will also put him/her on a week 1... meaning that the underpayment would not be collected....

I'm sorry but seriously some of the "advice" on this forum is shocking.

xxxSedgexxx

I may need to leave the country because I am chronically ill (I am not from Ireland), and so in this case adjusting future tax credits would not be possible to reclaim tax.

I either case, how/when do revenue review my taxes and "notice" that I should have paid tax on social welfare payments, if I don't request a P21?

Thanks

Squatter

xxxSedgexxx wrote: »

I either case, how/when do revenue review my taxes and "notice" that I should have paid tax on social welfare payments, if I don't request a P21?

Until you contact them looking for your P21 or seeking additional tax credits for medical expenses or some such, your tax file for the year is effectively 'open' so the underpayment won't be identified. But at some future point in time, probably after the 4 year time limit for seeking a refund of PAYE is over, the computer will close your file. Only then will your underpayment of tax be formally identified.

Some years later, Revenue will probably contact Interpol to trace you and when they have found you they will try to have you extradited back to Ireland so you can be be prosecuted as a massive tax thief! (Or maybe they won't bother!)

Alternatively, the tax underpayment will remain on your tax file for a thousand years and may be used against you if and when you apply for an Irish State contributory pension!