Paying tax on 3 months work done for a client

L

lillywhite

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Hello,I'm "Lillywhite" and I'm new here,so please be patient gentle!My query is this.I left my job as a trainee accountant back in January of this year,-(for alot of reasons,mostly I felt I wasnt very good at it,lacked confidence,and for other personal reasons)-back than my boss offered me some work just to tide me over 'till I found what it was I wanted to do with the rest of my life.It basically involved me helping a client get their books in order & upto date and ready for my boss to come in and do the audit,while at the same time training in someone to take over when I was done.All in all I was done and finished with the client and off their premises by end of April 2007.My query pertains to my paying tax.The situation was as follows;I "invoiced" the client my hrs worked, gave my contact details,& gratiously accepted the cheques when they came.The work was for three months Feb-to-Apr2007.Can anyone out there please offer me some advice as to what I need to do regarding paying tax for this work done,the procedure etc.I don't have contact with my old boss anymore,& my tax experience is limited to say the least.As of now, Im unemployed & need to sign on,filling out documents for the SW,this tax issue crops up,for me as a big issue.Any help would be very much appreciated.Thank you for taking time out to read this I hope it makes sense.Please try not to judge me too much for being a trainee accountant & nothing knowing this, the fact is my time was spent in audit I have little or no experience in filling ones own tax return,Ive no one to turn to,so I guess I have to learn somewhere right!:(
 
Firstly, you should register as a sole trader (even if you aren't going doing this again). Go to www.revenue.ie and download the TR1 form. Fill it in and submit it.

Secondly, make sure you have good records of what you earned at the time (presumably these cheques show up clearly on your bank statements). Identify any expenses that related solely and exclusively to earning this income, if any.

Provided you didn't have any non-PAYE income in 2006, you don't have to pay over the tax due on your 2007 income until October 2008. You will be obliged to submit a Form 12 tax return then too, so you've plenty of time to work out your tax liability (which will be based on the full year, rather than on a job by job basis).
 
Hi Capall,
From April to date the answer is no, and my intention is not to work till next year.Im thinking about doing primary school teaching as a career change, which would involve further study,but that again wont take place till the new year.Right now its a case of me having to sign on, in order not to screw up my pension contribution or something later on down the line??To be honest Capall, I dont really want to sign on but my Mum keeps telling me I need to or I'll miss out,right now Im living off what Ive earned on in those three months and my SSIA,I dont go, Ive no expenses,I paying my way at home so,I guess Im surviving.Im not really in a good place right now,and dont want to take job where my confidence is going to be downed again,I'd rather get deal with that right now,what do you think,I should add that my total earnings for the 3 months came to €8,600 does this help
 
Hi Lillywhite, no need to feel inadequate the tax system is far from simple even for those who have experience. I'll try to keep this straight forward and remember this is based only on the info. u have given me. It appears u ceased being a PAYE worker and became self employed from the period from feb to apr 2007. I assume that u are not VAT registered and simply issued an invoice (without VAT) and lodged the money to your bank. You will need to register as being self employed for that period and submit a tax return declaring the income you earned in the period. This form is called a form 12 and is very long and complicated but if you take your time and read it you will see that most of it is irrelevant to you. The sections you will need to fill out relate to income from a profession (i.e the three months pay you got net of any expenses you incurred during the course of your work) and the section for PAYE income (this is a replica of the information on your P60 which you should receive next January). The revenue will then finalise how much you owe them. It becomes complicated as this Form 12 is not due to be completed until 31 October 2008 (for the tax year 2007). You are obliged to make a payment of preliminary tax for the tax year 2007 by 31 October 2007 however you are allowed to base this on 100% of prior year payment and assuming this is your first year being self employed than payment is at this time is nil. I hope this helps. Have a look at the revenues guide to being self employed and the form 12 availible at revenue.ie
 
Hi Nige,
Thanks for that,is there anything else I need to be aware of,do I need to register for Vat?
 
Hi Sarahaca,
"I assume that u are not VAT registered and simply issued an invoice (without VAT) and lodged the money to your bank."-this is exactly what happened.Your advice is very thorough and precise and appears to be the general consenus of how to proceed from here.Thank you and Nige and Capall. For a first time experience this has been worthwhile and beneficial experience thanks again :)
 
Best of luck. On another note I would listen to your mum and go ahead with registering for unemployment benefit until you get yourself sorted. In the meantime keep in mind that you will be expected to pay tax in October 2008 on this income and it would be useful to have worked out roughly how much so that u do not get any nasty surprises!
 
If your total income for 2007 is 8600 then with your individual allowance of 1760 will cover your tax liability so you owe no tax

To be honest I would not worry about it.

You should do something totally different while you're off,even voluntary work,if you like working with children there is lots of Voluntary working in this area

You might as well sign on if you are entitled to anything ,its what you pay your PRSI for
 
capall said:
You should do something totally different while you're off,even voluntary work,if you like working with children there is lots of Voluntary working in this area

You might as well sign on if you are entitled to anything ,its what you pay your PRSI for
Click to expand...
Bear in mind that even voluntary work may impact your entitlement to welfare payments while unemployed. See here:

AVAILABLE FOR FULL-TIME WORK


 
Sarahaca,
Mums you cant beat them,there great huh! They really know EVERYTHING,thanks again
 
Hi Clubman, Capall, Nige
The idea of voluntary work sounds like a good idea,something I had'nt given much thought,I guess I've been so concerned about my own affairs I've neglected to see the bigger picture,I will bear it mind,thanks guys appreciate it.
 
In retrospect always!! Take your time - sort your head out, sounds like you had a bad experience in the first job - don't let that knock your confidence. As Capall said the tax issue is not a big deal and u are unlikely to have any liability arising on the income earned so far this year.
 
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