Understanding reduction of tax credits/rate bands by DSP Jobseeker's Benefit

zepman

Apologies for the long post, but wanted to describe the whole picture since I couldn't find concrete information anywhere.

I am married and have one child.

Background details (2019):

I was employed in 2019 until August, when my employment ended due to a redundancy.
So, in 2019, I was on Jobseeker's Benefit from September to December. I claimed Unemployment repayment in December and got a refund due until 5th December.

My wife was unemployed most of 2019 and was not on any pay-related benefit (ineligible). She started working in August (two weeks before I finished up).

By the end of September, she received an amended tax certificate with my tax credits reduced by €2,850.64 and my rate band reduced by €14,253, due to "DSP Jobseekers Benefit". Of course, this wasn't affecting anything since I hadn't transferred my unused rate band and credits to her. So she was paying 40% tax and only had her employee tax credit.


Current Situation (2020):

On January 1st, I submitted our Income Tax Return for 2019. It is still being processed, so I don't have a Statement of Liability for 2019 yet.

I started a new job this year from the 13th, and my JB was closed effective from that day. So I have been on JB only for 11 days in 2020 so far.

We are on joint assessment (have always been). Our total credit is €6600, and the total rate band is €70,600 since we are both employed now.

I registered my new job with Revenue last week, and then chose the recommended allocation of the tax credits and rate band. I received an amended tax certificate and everything looked fine.
However, this morning, the tax certificate was amended again and the credits and rate band were reduced due to "DSP Jobseekers Benefit", by the same amounts as in the last certificate from 2019 (mentioned above).

This is a significant decrease and I am struggling to understand why it has appeared now.

I understand that JB is taxable and that the tax is collected by decreasing the credits and rate band. But I don't understand why it is being applied for 2020.

1) From https://www.revenue.ie/en/jobs-and-pensions/periods-of-unemployment/how-to-claim-a-tax-and-usc-refund-if-you-are-unemployed.aspx, "the taxable amount of some social welfare payments is taken into account when calculating tax refunds.". Doesn't the fact that I received an Unemployment repayment in December 2019 mean that any tax due on the JB was already paid in 2019?

2) Is it the case that since our 2019 Income Tax Return has not been processed yet, they don't know if any tax due on my 2019 JB has been paid or not?


Any kind of help or information would be appreciated.:) I have not been unemployed before, so don't want to take this up with Revenue without having a little more understanding of how it all works.

relax carry on

It's just an issue with the the information provided by the DEASP. Contact Revenue and have them update your record for 2020 to reflect the actual amount of taxable DEASP payment received in 2020.

zepman

relax carry on wrote: »

It's just an issue with the the information provided by the DEASP. Contact Revenue and have them update your record for 2020 to reflect the actual amount of taxable DEASP payment received in 2020.

Thanks! Just got off the phone with Revenue and was basically told this. So, it's not something as dire as I had initially thought.

But my records were not updated during the call since they haven't received the actual numbers from DEASP. Once they do, they will update my tax credits/rate bands, which is fair.
I could ring DEASP and ask them to send it on (which is what the lady from Revenue advised me to do), but I'm not sure if that would expedite things.

FGR

zepman wrote: »

I could ring DEASP and ask them to send it on (which is what the lady from Revenue advised me to do), but I'm not sure if that would expedite things.

It's worth asking for a copy, just in case. DEASP are quite helpful when it comes to this as it's a common occurrence for various DEASP related payments.

zepman

So I contacted DEASP this afternoon and they confirmed that my claim was closed in January.

I was told that they send out files to Revenue each day and mine should have gone right after my claim was closed, so it might be just that they haven't gotten around to updating my record because of the busy time of the year.

I didn't want to play the waiting game, so got on to Revenue right after. This time, the lady I spoke to simply updated my credits right then and there, and I didn't even have to mention that I spoke with DEASP.

All sorted so!