Financial implications of taking a year off

C

coolaboola

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Both himself and meself are considering the possibility of taking a year out next year to return to education for one year (in both cases to do Masters'). We've enough savings to cover the mortgage and (frugal) living expenses (goceries, utilities, insurances, savings, entertainment). From a financial perspective is there anything we should be considering before we make such a move? What, if any, are, for instance, the tax implications? Are there any financial supports we can avail of while we're off (aside from being able to avail of student discounts again for the first time in quite a while!)?

Also curious to hear from others who may have done something similar.
 
Well, there's the obvious one of not earning any money of course!

Did it myself a couple of years ago. The most crucial aspect is that you're not collecting your PRSI 'stamps' which can have an effect down the line in terms of entitlement for state pensions etc.

Taxwise, if (and I presume you are) you're taking an academic year off ie Sept. - June, you obviously then only pay tax for 9 mths one tax year and 6 the next, which was a nice surprise for me when I started my current job. Also, make sure to apply for a tax rebate using the Revenue's Form 50 which is available on www.revenue.ie - the rebate certainly comes in handy around Feb. when funds are running very low indeed!!

Unfortunately unless you qualify for a student grant, or get a scholarship, there's no financial assistance available. With a mortgage etc. its unlikely you'd qualify for a grant.
 
Sounds like a high-risk strategy for both of you to take the same year off. How certain are you that you will pick up another job quickly at the end of your study? Any good reason why you wouldn't 'take turns' for the year off, just to ensure you have one steady income all the time?
 
> Also, make sure to apply for a tax rebate using the Revenue's Form 50 which is available on www.revenue.ie - the rebate certainly comes in handy around Feb. when funds are running very low indeed!!

See here:



Note that such refunds of tax paid due to unused tax credits/allowances during unemployment do not have to wait until the end of the tax year. In my experience they are paid immediately and possibly in tranches as the unused credits/allowances accumulate.

If you are a married couple then make sure that you are on the most advantageous form of married taxation (usually joint/aggregated) and make sure that you are not owed anything from this year or previous years.

> Are there any financial supports we can avail of while we're off

You may be entitled to tax relief on fees paid bu I'm not sure if this is of any benefit (e.g. a tax credit granted at source) if you are otherwise not paying tax:

[broken link removed]

> The most crucial aspect is that you're not collecting your PRSI 'stamps' which can have an effect down the line in terms of entitlement for state pensions etc.

Entitlement to certain benefits (not treatment benefit though) can be maintained while out of work by making voluntary PRSI contributions if you choose:

www.welfare.ie/topics/prsi/volcons.html

I'm sure that there may be other financial and non financial implications of such a move but I can't think of anything else obvious right now...
 
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