Boylan & Dodd Income Tax



So how do I work-out the tax I have to pay from the 1st January 2005?

For the sake of simplicity, we have omitted some reliefs from this section. If you are entitled to reliefs as arise in the Tax Breaks section or any other reliefs, then please factor them in to your calculations.

Then follow these steps:-
Step One Calculate your taxable income as follows:-
  1. Calculate your total income for the year, including salary and estimated overtime, BIK, rental income, deposit income etc.
  2. Deduct any tax-free allowances allowable at your top rate of tax.
  3. Deduct any relevant pension payments you make
  4. Deduct any qualifying medical expenses you have
  5. Deduct any permanent health insurance premiums you pay
Step Two Apply taxation to the income calculated in step one according to your situation as follows:

Single €29,400 @ 20%
Balance of Income @ 42%
Lone Parent €33,400 @ 20%
Balance of Income @ 42%
Married
(Two Incomes)		 €58,800 @ 20%
Balance of Income @ 42%

(Note: maximum of €38,400 transferable between the spouses).
Married
(One Income)		 €38,400 @ 20%
Balance of Income @ 42%

In this situation, if one spouse works at home caring for dependents, you can also claim the Home Carer's tax credit.
Step Three Calculate your Tax credits. For many, (but not all) people, the credits will be the sum of the following:-

Credit Type Single Married
Personal Credit €1,580 €3,160
PAYE Credit €1,270 €2,540*
"Home Carer" credit n/a €770**
* €1,270 for each spouse in PAYE employment i.e. credit granted on an individualised basis.
**For one income families where one spouse cares for dependents
Step Four Calculate your income tax "RELIEFS".

The main ones are:-
- Mortgage Interest Relief*
- Medical Insurance*
- Tuition Fees
- Rent Relief
- Waste Charges
- Dental Insurance
Click on a relief to find out more details.
*Mortgage Interest relief and Medical Insurance relief are now granted automatically at source. Make sure to calculate the actual tax effect as opposed to the amount you pay for these reliefs, for the purposes of this calculation.
Step Five Calculate your total "tax credit"; simply add the credits from Step Three to the reliefs from Step Four.
Step Six Calculate your PAYE liability by taking the total tax due (Step Two) and subtracting your tax credit (Step Five). We're nearly there! Next, it's PRSI!
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Step Seven Calculate your PRSI liability as follows (full rate contributors only):

Liable Income: €xx,xxx*
Deduct: €127 per person in PRSI Class A1 Employment multiplied by the number of weeks in insurable employment**
Liable to PRSI: €x,xxx
PRSI @ 4% €xxx

* Note: Income is subject to a ceiling of €44,180 per person.

Also, if your weekly income is less than €287 throughout the period, you are completely exempt from PRSI. If so, please skip steps seven and eight and move on to step nine.

Make sure to exclude your qualifying pension payments and Permanent Health Insurance premiums but NOT BIK from the income figure liable to PRSI. BIK received is now liable for PRSI payments.

**Once your salary passes the ceiling, you no longer get the €127 allowance per week and you cease to pay PRSI. So for the sake of example, if you earned €44,180 in week one, your annual exemption would only be €127.

Self-Employed PRSI Rates: Total Liable Income x 3% (minimum of €253 due)

Low-Rate PRSI:

- take an exemption of €26 per week in insurable employment
- take PRSI rate at 0.9%
Step Eight Now (finally), calculate your health levy contribution by taking your total liable income where this is over €400 per week throughout the period (per person in "A1" Employment) and multiplying the total liable income by 2%.

Remember to include BIK payments for the first time. -
Step Nine We are now ready to put all the pieces together as follows:

Taxable Income Step One
Less: PAYE Step Six
Less: PRSI Step Seven
Less: Health Levy Step Eight
= Net Annual Income