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Declaring <€5,000 self-employed income
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04-03-2020 3:37pm#1Hi,
Sorry for the basic questions.
I moved back to Ireland in December after a few years working abroad and have since been working purely self-employed doing online freelance work for an American company. I have recently set myself up on ROS.
My earnings for those few weeks in December were < 5,000 euro so I believe I have to fill out Form 12 before the end of this October is that right? I believe that this is available in myAccount rather than ROS but I can't seem to find it. Can anyone point me in the right direction? Or do I need to fill it out the old fashioned way? Or do I have to do something in addition to setting myself up on ROS before Form 12 appears in myAccount?
Also, am I correct in saying that the only thing I need to fill out for this year is Form 12, and next year I will instead fill out Form 11 and pay preliminary tax for 2021 as well as tax for 2020?
Thank you. 0
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Deleted User wrote: »Hi,
Sorry for the basic questions.
I moved back to Ireland in December after a few years working abroad and have since been working purely self-employed doing online freelance work for an American company. I have recently set myself up on ROS.
My earnings for those few weeks in December were < 5,000 euro so I believe I have to fill out Form 12 before the end of this October is that right? I believe that this is available in myAccount rather than ROS but I can't seem to find it. Can anyone point me in the right direction? Or do I need to fill it out the old fashioned way? Or do I have to do something in addition to setting myself up on ROS before Form 12 appears in myAccount?
Also, am I correct in saying that the only thing I need to fill out for this year is Form 12, and next year I will instead fill out Form 11 and pay preliminary tax for 2021 as well as tax for 2020?
Thank you.
I am open to correction here, but regardless of the amount you earned, if you are self-employed you need to register as such using ROS and not MyAccount. MyAccount is a service for PAYE tax payers with less than 5,000 in profit from non-PAYE sources and people that are not availing of reliefs that would lead to no liabilities (such as Rent a Room Scheme).
You are going to need to register as self-employed in ROS from 2019 onwards (I am assuming that you are going to continue as self-employed in 2020). As you are saying that you earned less than 5,000 you will more than likely have no liability at all (it depends if you need to declare additional sources of income, etc) but regardless you need to declare it.
It is a bit unclear your situation as more than likely you are going to be non-resident, and non-ordinarily resident for 2019 (but if you are Irish you seem to be domiciled) and also you are using the term self-employed (are you a sole trader or director of a company?), so I would recommend you to speak with an accountant. In any case you are going to need it if you are going to continue as self-employed and providing services to an American company. Those services might be outside the scope of Vat (transactions with a non-EU country) and you need specific tax and accounting advice in your situation not to speak that there is not enough info in your post for it.0 -
I am open to correction here, but regardless of the amount you earned, if you are self-employed you need to register as such using ROS and not MyAccount. MyAccount is a service for PAYE tax payers with less than 5,000 in profit from non-PAYE sources and people that are not availing of reliefs that would lead to no liabilities (such as Rent a Room Scheme).
You are going to need to register as self-employed in ROS from 2019 onwards (I am assuming that you are going to continue as self-employed in 2020). As you are saying that you earned less than 5,000 you will more than likely have no liability at all (it depends if you need to declare additional sources of income, etc) but regardless you need to declare it.
It is a bit unclear your situation as more than likely you are going to be non-resident, and non-ordinarily resident for 2019 (but if you are Irish you seem to be domiciled) and also you are using the term self-employed (are you a sole trader or director of a company?), so I would recommend you to speak with an accountant. In any case you are going to need it if you are going to continue as self-employed and providing services to an American company. Those services might be outside the scope of Vat (transactions with a non-EU country) and you need specific tax and accounting advice in your situation not to speak that there is not enough info in your post for it.
Thank you for your quick and detailed reply, very much appreciated.
Yes you are correct, I believe that I am a non-resident, non-ordinarily resident but domiciled person for 2019.
I spoke to a friend who is an accountancy teacher rather than an accountant who instructed me up to as far as my first post. I decided to check if someone on Boards could clarify his opinion rather than an actual accountant both as calculating my income is not complicated (I get an invoice each month with the amount I am owed on it and I have no expenses, additional sources of income etc.) and the income is also not much more than the dole so I selfishly do not wish to spend a chunk of it. The only thing I wish to check is:
1) What, if anything, do I need to fill out for the small amount I made in 2019?
2) What form(s) do I need to fill out for 2020 and when do I need to fill them out?
You have suggested that there is possibly not enough information in my post to answer these questions. If you could let me know what information I could provide to help then I will gladly do so.
Edit: If it helps, I work for a company not too dissimilar to Fiverr.
Again, thank you for taking the time to reply. 0 -
Deleted User wrote: »Thank you for your quick and detailed reply, very much appreciated.
Yes you are correct, I believe that I am a non-resident, non-ordinarily resident but domiciled person for 2019.
I spoke to a friend who is an accountancy teacher rather than an accountant who instructed me up to as far as my first post. I decided to check if someone on Boards could clarify his opinion rather than an actual accountant both as calculating my income is not complicated (I get an invoice each month with the amount I am owed on it and I have no expenses, additional sources of income etc.) and the income is also not much more than the dole so I selfishly do not wish to spend a chunk of it. The only thing I wish to check is:
1) What, if anything, do I need to fill out for the small amount I made in 2019?
2) What form(s) do I need to fill out for 2020 and when do I need to fill them out?
You have suggested that there is possibly not enough information in my post to answer these questions. If you could let me know what information I could provide to help then I will gladly do so.
Edit: If it helps, my work would not be too dissimilar to the work provided by Fiverr.
Again, thank you for taking the time to reply.
Again the problem is that without knowing what services you are providing to the American company and in which circumstances, it is very difficult to assess what is going on. You are going to need an accountant and they are going to need to know more about your business activities. I would not feel comfortable asking you for this information in a forum for Data Protection issues. And I would not recommend you to start disclosing sensitive information in a forum
If you have not done anything else but starting to provide services to this company, you are going to be a sole trader (but I am basing that on the information you have provided in your previous post). In that situation you have until October 2020 to declare your income for 2019. The form to fill out would be the F11 and if you are under 5,000 you will more than likely have no liability at all.
Your accountant would need to know among other things- when you returned to Ireland
- If you had any other income since your return
- Did you have any other income before returning to Ireland that might need to be considered from the taxation point of view in Ireland (if you are domiciled this could be a likely issue)?
- Are you domiciled Irish or not, did you stop being ordinarily resident in Ireland?
- If the services you are providing to the company fall within the scope of Vat (if they fall within the scope if you are going to be over or under the threshold for registration)
- Do you have a business location? and where
- If you are working from home, is it a rented or private property? (if private property and you want to claim expenses such as light and heat, what effect this will have down the road on any PPR relief from the CGT point of view)
- Regardless of business location what expenses do you have when performing your work and can they deducted?
- Have you bought equipment for this job? Can you claim capital allowances for it and how much?
- Accounting period you are going to be using for accounts purposes, etc
You are going to need an accountant to check everything and submitting the F11 for 2019 would be a very small extra once you have the rest ready. And the rest it is very important is sound and proper, so I very much recommend you that you get proper accounting and tax advice, the above is only a 5 minutes quickie thing and an accountant should do much and more extensive questions in order to get you in the right and proper side with Revenue0 -
Thank you again for your detailed and fast reply.
Yes I am being very careful about not giving out any sensitive information about my work.
I will of course consider getting an accountant if it is deemed necessary. However, the answers to the above questions are very straightforward:
I returned in November, I have no other income, I was a student living off a scholarship in the UK before then, I am domiciled but not ordinarily resident, I do not have to apply for VAT as my turnover is less than any threshold, I do not have a business location, I live in my parents house which they own, I do not have expenses to claim and have not bought equipment.
I'm quite certain that I know how much I should pay and I do not believe that I need to deduct any expenses etc. for it. I believe that for 2019 I have to pay either nothing or only the 4% PRSI, I'm just trying to figure out which one it is and what form I should fill out to declare it.
And as for this year, my total liability will be less than my personal tax credits so I will only have to pay PRSI and USC. For this, I'm just wondering if I need to pay preliminary tax this year or if my first year doing that is next year.
Again, thank you for your fast and detailed responses, greatly appreciated.
Edit: And if it helps, my work is in data analysis. I am given a certain amount of data, I make changes to it and send it back. I am paid per hour and invoiced each month. Nothing complicated.0 -
Deleted User wrote: »Thank you again for your detailed and fast reply.
Yes I am being very careful about not giving out any sensitive information about my work.
I will of course consider getting an accountant if it is deemed necessary. However, the answers to the above questions are very straightforward:
I returned in November, I have no other income, I was a student living off a scholarship in the UK before then, I am domiciled but not ordinarily resident, I do not have to apply for VAT as my turnover is less than any threshold, I do not have a business location, I live in my parents house which they own, I do not have expenses to claim and have not bought equipment.
I'm quite certain that I know how much I should pay and I do not believe that I need to deduct any expenses etc. for it. I believe that for 2019 I have to pay either nothing or only the 4% PRSI, I'm just trying to figure out which one it is and what form I should fill out to declare it.
And as for this year, my total liability will be less than my personal tax credits so I will only have to pay PRSI and USC. For this, I'm just wondering if I need to pay preliminary tax this year or if my first year doing that is next year.
Again, thank you for your fast and detailed responses, greatly appreciated.
With the information you have provided, you would need to decide you accounting year (either from start date to 12 months later or running with the calendar year). If you go with calendar year (for simplicity purposes), you have a liability from the start of trading to 31 of December 2019 for earnings for that period. Get all the documentation for the income you earned (it does not matter when you receive it) deduct expenses and you get your profit. When you go to fill out the F11 you will need to provide the details from your accounts in the form. Once you fill out the form for the period of trading you more than likely will have no liability if under 5,000.
If you have any queries about this, I recommend you that you call Revenue and tell them your issues, at this time of the year you would be early with the calculations and they will help you. The website will ask you to pay preliminary tax for 2020, as you are starting this would need to be either:- 90% of your expected liability for 2020
- 100% of the liability for the previous year in this case 2019
I recommend you that you do not skip the step of preliminary tax payment, it gets sole traders into trouble all the time, once they need to pay full liability. They wait until the end to pay the liabilities and then it is a lot of money to pay, the crying and wailing in the accountant office starts and you get the point.
Tax credits for 2019 quickly IT- Single tax credit 1650
- Earned Income tax credit 1300
2020- Single tax credit 1650
- Earned Income tax credit 1500
The tax bands for Income tax for 2019 and 2020 are the same
Even if you do not have Income Tax liability for 2020 you will more than likely have PRSI (threshold for payment is 5,000) liability and USC liability threshold for payment is 13,000). So you will need some way of calculating how much you would need to pay for preliminary tax, maybe some Excel worksheet will help, there are templates online that might be able to help you.
I recommend you to get some of the supports for people starting new businesses from either:- Citizen's Information office. They have volunteer accountants and lawyers that provide services for free and they might provide better and confidential advice than a forum.
- Local Enterprise Office
- Irish Point of Single Contact
- Definitely Revenue, calling them will be the first place to start
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Thank you again for the very detailed response, greatly appreciated.
Just to confirm, regardless of the calendar I choose, then I should fill out a Form 11 before the end of this October? I don't fill out Form 12 for 2019 as it is only for PAYE earners with additional income (as you correctly stated earlier)? So if I choose the calendar year route, then on form 11 for this year I declare my income for only 2 months (start of trading - December 2019)?
I think you answered my question about preliminary tax too but just to be sure. If it turns out that my liability for 2019 is zero, then paying preliminary tax is not necessary as "100% of the liability for the previous year in this case 2019" will be zero is that right? (I will be paying preliminary tax, but just want to be sure that if I underestimate my expected liability for 2020 then it's not a big deal.)
Thank you again. 0 -
Deleted User wrote: »Thank you again for the very detailed response, greatly appreciated.
Just to confirm, regardless of the calendar I choose, then I should fill out a Form 11 before the end of this October? I don't fill out Form 12 for 2019 as it is only for PAYE earners with additional income (as you correctly stated earlier)? So if I choose the calendar year route, then on form 11 for this year I declare my income for only 2 months (start of trading - December 2019)?
I think you answered my question about preliminary tax too but just to be sure. If it turns out that my liability for 2019 is zero, then paying preliminary tax is not necessary as "100% of the liability for the previous year in this case 2019" will be zero is that right? (I will be paying preliminary tax, but just want to be sure that if I underestimate my expected liability for 2020 then it's not a big deal.)
Thank you again.
I recommend you that you save the money for preliminary tax every month and you pay it in October. The majority of sole traders get into trouble with Revenue because of that and when you are starting things will get tight. You think you can pay a couple of hundreds in Oct, and them it turns out that you spent the money and you scramble around to get that money, you end up with penalties and in the defaulters list, etc. It's a mess.
By Oct you will have an idea of how much you are making on a regular basis every month, more than likely you already know, so cut your losses short, start putting the money aside in a savings account and pay 90% in Oct. If you underestimate but you have paid the 90% it won't be such a big deal than if you don't pay anything and wait until 2021 when you will have to pay preliminary tax for 2021 and the balance for 2020.
And trust me tax payers always, always underestimate their liabilities by a huge margin.0 -
Oh I have no issue paying the tax this year, I have some savings. I just want to be sure that even if I pay 30% more preliminary tax than I estimate to be on the safe side, but in the end this ends up being only 85% of my expected liability rather than 90%, then I am still ok as I have also satisfied the "100% of the liability for the previous year in this case 2019" criteria?
Also just to be sure, is what I stated here correct?
"Just to confirm, regardless of the calendar I choose, then I should fill out a Form 11 before the end of this October? I don't fill out Form 12 for 2019 as it is only for PAYE earners with additional income (as you correctly stated earlier)? So if I choose the calendar year route, then on form 11 for this year I declare my income for only 2 months (start of trading - December 2019)?"
Thank you again, I really do appreciate your help. 0 -
Deleted User wrote: »Oh I have no issue paying the tax this year, I have some savings. I just want to be sure that even if I pay 30% more preliminary tax than I estimate to be on the safe side, but in the end this ends up being only 85% of my expected liability rather than 90%, then I am still ok as I have also satisfied the "100% of the liability for the previous year in this case 2019" criteria?
Also just to be sure, is what I stated here correct?
"Just to confirm, regardless of the calendar I choose, then I should fill out a Form 11 before the end of this October? I don't fill out Form 12 for 2019 as it is only for PAYE earners with additional income (as you correctly stated earlier)? So if I choose the calendar year route, then on form 11 for this year I declare my income for only 2 months (start of trading - December 2019)?"
Thank you again, I really do appreciate your help.
It's the F11 the form.
Regarding Preliminary tax you pay in Oct 2020 but you will discharge the balance in 2021. If you pay a huge balance in 2021 they will notice, but being a first year if the balance is paid and paid on time, they will more than likely say nothing. The problem is going to be if you cannot pay the balance in full in 2021, then is when the penalties are going to arise:3.4 What happens if I don't pay my Preliminary Tax on time?
If you don't pay your Preliminary Tax by 31 October or if you don’t comply with your direct debit arrangement or if the amount of Preliminary Tax you pay is too low; you may be liable to an interest charge. The due date for the payment of your full tax liability or the balance of tax due is backdated to the date the preliminary tax was due, i.e. 31 October in the actual year of assessment. In accordance with section 1080 of the Taxes Consolidation Act, interest is due on late payments of tax for each day, or part of a day, at the appropriate rate.
Further information on interest charges including the rate at which interest is charged is in Tax and Duty manual Guidelines for charging interest on late payment.
Revenue will allow you a margin of error: lets say you end up paying 85% instead of 90% of preliminary tax. There is a great chance they will not say anything, it is an estimate. But you have 10 months to know what is going to be, if you pay preliminary tax of 40% of final liability it will start ringing bells. They are automatizing their systems and algorithms tend to notice those irregularities really fast and they might want to pick you up for an audit to check early on that nothing is off.
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