Help tax question

Eimee90 wrote: »

Hi guys, just realised that in my last paycheck before new year I'm going to exceed my tax cutoff 33,000, I will earn over it does that mean my whole paycheck will be taxed at 40 percent. Can I do anything.

Thanks

No you will no be tax on your whole paycheck at 40. There will be a calculation on a monthly or weekly basis, depending how you are paid, and the amounts that are below the threshold will be taxed at 20%, as it is happening right now, and only the amounts going over the threshold will be taxed at 40%.

You don't need to do anything to ensure this happens, it should be done automatically by the payroll department. But keep an eye that the calculation is done properly and thresholds and credits are used properly.

Just a quick question are you married and have transferred some of your tax band to your partner? I ask because the 20% threshold was increased and it is right now 35,300 Euros. 33,000 is an old threshold. You can check bands, credits, etc in the Budget 2020 Summary Leaflet from Revenue

I hope this helps

Eimee90 wrote: »

No, not married. In January will everything go back to normal and be back to the 20 percent or do I need to get onto revenue to change that.

First of all, the tax band for both 2019 and 2020 is 35,300 that will be taxed at 20%. If you go over that threshold before the year end only the amounts above 35,300 will be taxed at 40%. In Jan you should start again from scratch. If in 2020 you don't go over the threshold, all your income would be taxed at 20% but if you go over, part of it will be taxed at 20% (the part below the threshold) and part at 40% (the part that goes over the threshold) and this will happened the moment you go over the threshold. These calculations regarding going over the threshold happened every time you are going to be paid.

You should not need to do anything with Revenue, but you should check your payslip to make sure it is okay regardless of going or not over the threshold and make sure you get all your credits, tax is correct, etc.

If at the end of the year you got a salary increase and your new salary for 2020 is above the threshold (make a yearly calculation of your gross salary to check that), in 2020 every time you get a paid and a payslip you will notice that some amounts are taxed at 20% and others are taxed 40%.

Thresholds and credits apply to the period of Jan to Dec and they restart with the new year. A good resource is How your income tax is calculated.