Can I avoid paying DIRT if I am on a low income?

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mcriot29

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Hey I get 175 e a week from deposit account interest after dirt is taking .
Is it poss for me to get any of the dirt tax back in tax credit since I have no outher income and I'm not working or getting dole
I have heard I can on the form if a tax credits it this true or be charged at income tax rate since it my only income
 
I'm in the same boat. The answer is no (which is pretty annoying compared to just a couple of years ago, considering that you are now paying considerably more in DIRT that you would in income tax on the same amount if it were income from employment).

You are also liable to pay PRSI at 4% on top of the 41% DIRT. Everyone is liable for this from 1-Jan-2014, but Revenue have always charged it to people whose only income is "unearned" (e.g. rental or deposit income). I had to pay it for 2013, but not for previous years when I had other income from employment.
 
If you want to use your tax credits you could always try getting a job, or using some of your substantial funds (175 net per week equates to over 15k gross interest p.a.) to invest in either a business of your own, or in investment(s) that would yield a return in a form of income (eg dividends) that would allow you to use your standard rate band and personal tax credit.
 
mandelbrot said:
If you want to use your tax credits you could always try getting a job, or using some of your substantial funds (175 net per week equates to over 15k gross interest p.a.) to invest in either a business of your own, or in investment(s) that would yield a return in a form of income (eg dividends) that would allow you to use your standard rate band and personal tax credit.
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So those of us who have no other income other than deposit interest are really wasting our time having large savings? We would be better off investing it elsewhere to avail of lower tax rates on the returns?
 
dub_nerd said:
I'm in the same boat. The answer is no (which is pretty annoying compared to just a couple of years ago, considering that you are now paying considerably more in DIRT that you would in income tax on the same amount if it were income from employment).

You are also liable to pay PRSI at 4% on top of the 41% DIRT. Everyone is liable for this from 1-Jan-2014, but Revenue have always charged it to people whose only income is "unearned" (e.g. rental or deposit income). I had to pay it for 2013, but not for previous years when I had other income from employment.
Click to expand...

In previous years you still had to pay DIRT on your deposit interest albeit at a slightly lower rate but not PRSI.
In years gone by when the DIRT rate was below the income tax rate was a person required to pay the difference between the DIRT rate and the income tax rate?
 
mandelbrot said:
try getting a job / invest in either a business
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Easy advice but not that easy these days! Jobs are scarce especially if you are of a certain age which OP could be if they have that sort of savings which could also be redundancy related, we don't know.

As for a starting a business, not as easy as all that either and a good way to lose money!

The last option is a possibility but again is not without risk. It is unfortunate that someone who is not costing the taxpayer by drawing welfare payments is taxed more on the income than if it was from employment. While many who have paid nothing or minimal amounts into the system can get a minimum income of nearly 10k p.a. on JA.
 
mandelbrot said:
If you want to use your tax credits you could always try getting a job, or using some of your substantial funds (175 net per week equates to over 15k gross interest p.a.) to invest in either a business of your own, or in investment(s) that would yield a return in a form of income (eg dividends) that would allow you to use your standard rate band and personal tax credit.
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I have health issues which cost me a lot in money every week
Also due to the money I have in bank I can't get benefit
And sure I'd love to have my own business but i would not have a clue what to do
My plan was to be a personal trainer which I did .
But can't work at it now due to Heath issues
Also I have to look after my mother since my father passed
I think the uk tax on savings is a Lot better then in Ireland
Sure I'd love to invest in a business but how
 
If you invest in Irish Government Bonds, the interest is paid gross and is not liable for DIRT. It is liable to Income Tax but only after any tax credits are taken into account so if your only incomer is 15,000 pa then no tax would be due
 
mandelbrot said:
If you want to use your tax credits you could always try getting a job, or using some of your substantial funds (175 net per week equates to over 15k gross interest p.a.) to invest in either a business of your own, or in investment(s) that would yield a return in a form of income (eg dividends) that would allow you to use your standard rate band and personal tax credit.
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The OP was looking to see whether they could use their tax credits to reduce DIRT ... not for a list of other things that tax credits can be used for.
 
SoylentGreen said:
In previous years you still had to pay DIRT on your deposit interest albeit at a slightly lower rate but not PRSI.
In years gone by when the DIRT rate was below the income tax rate was a person required to pay the difference between the DIRT rate and the income tax rate?
Click to expand...
"Slightly" lower? -- it has gone up 105% in five years ... 125% if you count the PRSI.
Even five years ago, DIRT was more expensive than income tax for modest deposit income because there were no credits that could be offset against it, unlike income tax.
 
dub_nerd said:
"Slightly" lower? -- it has gone up 105% in five years ... 125% if you count the PRSI.
Even five years ago, DIRT was more expensive than income tax for modest deposit income because there were no credits that could be offset against it, unlike income tax.
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Is there a solution to this other than the get a job idea?
 
SlurrySlump said:
Is there a solution to this other than the get a job idea?
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mandelbrot and jpd have provided the solution but they might have got lost in the "get a job" diversion.

jpd said:
If you invest in Irish Government Bonds, the interest is paid gross and is not liable for DIRT. It is liable to Income Tax but only after any tax credits are taken into account so if your only incomer is 15,000 pa then no tax would be due
Click to expand...

mandelbrot said:
If you want to use your tax credits you could always try ... investing in investment(s) that would yield a return in a form of income (eg dividends) that would allow you to use your standard rate band and personal tax credit.
Click to expand...
 
I'm not sure, but if you were to invest the money in an overseas deposit account would the interest be paid gross and be classed as normal income here, where full tax credits could be used?
 
No, I think that if the overseas account is a DIRT type account, then DIRT applies
 
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