How to calculate tax for income and invalidity pension

ClmAlfie

Can anyone explain how my income and my wife's invalidty pension are tax,

l'm abit confused by it


Usually l can work it out but with her invalidty pension, l can't
does she get her own tax credit,

And do we get the increase of 26300 for tax rate band?


If not to both questions


Will my tax credit and tax rate band be deducted because of her payment



For example she gets 208.50 I get 430


Thanks

1991hun

Hi there

Are you a PAYE worker? Are you taxed at source and receive your salary net of taxes?

ClmAlfie

1991hun wrote: »

Hi there

Are you a PAYE worker? Are you taxed at source and receive your salary net of taxes?

I am and yes
I can work out my tax, its for my wife
I do know her invalidity pension is taxable, what l want to know is does she get tax credit and how does the tax rate band work out

1991hun

All of the income will be taxed at 20%. The payments aren't liable to USC/ PRSI. Your wife is entitled to tax credits of 1,650 which will reduce this liability. It is likely that you are already claiming the married tax credit through payroll so your wife would not be also entitled to this.

Your wife must declare the income through Revenue's myAccount facility. To declare a taxable payment:

-sign in to myAccount
-select ‘Manage your Tax 2020’ link in PAYE Services
-select ‘Add new income’ in the Your additional income section.
-click 'show more' and select the correct DEASP payment or payments.
For each DEASP income you are declaring you will need to confirm the date the payment started and the current weekly amount


Here is the estimated annual tax liability for your wife:

Gross income 208.5*52 = 10,842
Tax * 20% = 2,168
less tax credit= (1,650)
Tax liability = 518

Net income = 10,324

Revenue may decide to reduce your wife's future tax credits to recoup the tax.

Hope this helps?