Advertisement
If you have a new account but are having problems posting or verifying your account, please email us on hello@boards.ie for help. Thanks :)
Hello all! Please ensure that you are posting a new thread or question in the appropriate forum. The Feedback forum is overwhelmed with questions that are having to be moved elsewhere. If you need help to verify your account contact hello@boards.ie
Hi there,
There is an issue with role permissions that is being worked on at the moment.
If you are having trouble with access or permissions on regional forums please post here to get access: https://www.boards.ie/discussion/2058365403/you-do-not-have-permission-for-that#latest

Low income in 2020 but still a tax liability

  • 25-01-2021 7:34pm
    #1
    Bocking 14
    Registered Users, Registered Users 2 Posts: 85 ✭✭


    For a self-employed person whose total 2020 income was €13000 (€2000 gross profit and €11000 PUP) should they still have a tax liability?

    I earned significantly more than this in 2019 but had no income tax liability just PRSI.

    This year there is no PRSI payable (assuming a credit is given for each PUP payment) but there is a tax liability.

    It seems this is because the Earned Income Credit available is €1650 or 20% of your qualifying earned income, which means the amount of this credit is limited to €400 (€2000 x 20%).

    The PAYE tax credit is allowable against social welfare payments but the Earned Income Credit appears not to be.

    This appears to be discriminatory against the self-employed.

    Is this correct and is there any solution such as an unclaimed credit?

    Thanks in advance.


Comments

  • #2
    Stratvs
    Registered Users, Registered Users 2 Posts: 958 ✭✭✭Stratvs


    https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/income-and-employment/earned-income-credit/index.aspx

    Where you have both self employed income and PAYE type ( which includes DSP payments ) income then the two credits can be combined to maximum value of €1,650.

    So for a single person with total income of €13,000 their personal and PAYE/earned income credits would mean no tax. You need to tick both PAYE and earned income credit boxes on the form 11 and it will compute the most appropriate split to maximum of €1,650 between them. In this case it would be €1,650 personal and €950 between the other two. That gives €2,600 which covers tax due on €13,000.


  • #3
    Bocking 14
    Registered Users, Registered Users 2 Posts: 85 ✭✭Bocking 14


    Stratvs wrote: »
    https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/income-and-employment/earned-income-credit/index.aspx

    Where you have both self employed income and PAYE type ( which includes DSP payments ) income then the two credits can be combined to maximum value of €1,650.

    So for a single person with total income of €13,000 their personal and PAYE/earned income credits would mean no tax. You need to tick both PAYE and earned income credit boxes on the form 11 and it will compute the most appropriate split to maximum of €1,650 between them. In this case it would be €1,650 personal and €950 between the other two. That gives €2,600 which covers tax due on €13,000.

    Thank you Stratvs. Do this still apply if you only had self-employed income prior to receiving the PUP?


  • #4
    Stratvs
    Registered Users, Registered Users 2 Posts: 958 ✭✭✭Stratvs


    Bocking 14 wrote: »
    Thank you Stratvs. Do this still apply if you only had self-employed income prior to receiving the PUP?

    Whatever sources you have in the year will have the appropriate amount of the relevant tax credit allocated. You could start self-employed then get DSP payments and end up back self-employed. The credits will be applied as applicable to the different sources.

    On the 2020 form 11 JSB or PUP or even state pension all go in the one field so there is no differentiation for purposes of application of the PAYE tax credit. ( carers from DSP does go separate I believe )


Advertisement