How much tax will I pay after some financial restructuring?

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marsaday

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Done a bit of financial restructuring recently after taking the helpful advice of fellow AAM contributors over the last while and want to get a ball park figure of how much tax , PRSI and USC we should expect to pay in 2023:

ARF ( myself): €55000

Income ( self employment), partnership with spouse ( me) : €12,500
Income ( self employment), partnership with spouse ( spouse ) :€50,000

Total joint gross Income. €117,500

( I have engaged with Revenue on this Partnership agreement and it has been agreed in principal i.e a 20:80 split

All my figures are best estimate gross figures

I think we can claim €7100 in tax credits and set our cut off point at €80,000 but I would appreciate if you guys could confirm this and maybe confirm my calculations.

Any thoughts on this would be much appreciated. Thanks so much
 
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Thanks Hasbeen. As it happens I did try that , and several other on line calculators. The problem is they don't take in to account ( I think anyway) that I can only claim on my own tax credits on my ARF which is solely in my name . I can't use up some of the credits and cut off points on the ARF income. Just wish I knew if I was inputting information correctly.
 
ARF income is treated like another employment.

Tax credits and SRCOP have be partially or fully allocated to ARF, like any other employment.
 
Does this look correct to ye ?
20222023Difference
Gross Income117,500117,500
Taxable117,500117,5000
Cutoff73,60080,0006,400
Information on the Tax CreditsCredits6,8007,100300
Information on the Universal Social ChargeUniversal Social Charge3,8623,78181
Information on PRSIPRSI4,7004,7000
Gross Tax32,28031,0001,280
Income Tax25,48023,9001,580
Net Income83,45885,1191,661
 
2023

80k @ 20% = 16,000
(117,500 - 80,000) @ 40% = 15,000

Note that I think there is a problem here.

The full 80k is taxed at 20% only under some conditions, see below:


1683664365305.png
 
Thanks Protocol. So the €85119 Nett Figure is incorrect . What do you calculate it at ?
 
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Trying to get to the bottom of this:

My own calculations are:

Tax:

Me: €49000 @20%. €9800
Spouse: €31,000@ 20%. €6200
Me: €18500 @40%. €7400
Spouse: €19000@40%. € 7600

Gross Tax: €31000
Tax credits : €7100 total

Married Person Self Employed : me €3550
Married Person: Self Employed Spouse: €3550

Tax calculation : €31000 - €7100 = €23900
PRSI : €117500 @ 4%. € 4700
USC ( I’m trusting the taxcal.ie
calculation on this € 3782

Nett annual salary. €85118
( same as taxcalc.ie)

I note on my tax credit certificate that PRSI is deducted at 8% on my ARF. I presume this is incorrect. Anyone know why this would be shown on it.

Thanks in advance for any replies.
 
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Your calculation of circa €85k are correct but not so sure about the 8% PRSI on your ARF. Doesn't sound right. Give Revenue a call.
You have potentially a huge tax /PRSI/USC bill of €32k per anum. Have you considered making a lump sum pension contribution for your spouse . Depending on his/her age they could contribute anything up to 40% of their income. Say your spouse was 56 for example , you could contribute 35% of the €50k income ( that is €17500 ) and write this off against your tax bill, effectively halving your liability.
 
Apologies , the 8% is USC and not PRSI.. What it says on the tax credit certificate for 2023 is "USC on Income on over €70044 in this employment will be charged at 8%. However my ARF provider is deducting 8% on 100% of the distribution. Is this correct ? Should the 8% be on everything if the income is over €70044 or 8% on the part of the income that is over €70044 ? Hope this makes sense.
 
marsaday said:
Trying to get to the bottom of this:

My own calculations are:

Tax:

Me: €49000 @20%. €9800
Spouse: €31,000@ 20%. €6200
Me: €18500 @40%. €7400
Spouse: €19000@40%. € 7600

Gross Tax: €31000
Tax credits : €7100 total

Married Person Self Employed : me €3550
Married Person: Self Employed Spouse: €3550

Tax calculation : €31000 - €7100 = €23900
PRSI : €117500 @ 4%. € 4700
USC ( I’m trusting the taxcal.ie
calculation on this € 3782

Nett annual salary. €85118
( same as taxcalc.ie)

I note on my tax credit certificate that PRSI is deducted at 8% on my ARF. I presume this is incorrect. Anyone know why this would be shown on it.

Thanks in advance for any replies.
Click to expand...
PRSI isn't shown on a tax credit cert. You're probably looking at the USC I'd guess.

If you have your USC bands allocated to another source of income, all of the ARF would have USC at 8% on it.
 
Thanks for that Ciru75.Looked this up on the Revenue site :

The USC Rates & Bands from 1 January 2023 will be:

  • €0 – €12,012 @ 0.5% - no change
  • €12,013 – €22,920 @ 2%
  • €22,921 – €70,044 @ 4.5%
  • €70,045+ @ 8%
  • Self-employed income over €100,000: 3% surcharge
*Incomes of less than €13,000 are exempt from USC.

So , our USC on €117,500 total joint earnings and ARF would be €6195 as follows :

€12012 @ .5% €60.06
€10908 @ 2% €218.16
€47124 @ 4.5% €2120.59
€47456 @8% €3796.48

Total USC €6195.29

Can anyone tell me are my calculations correct ? Thanks very much
 
marsaday said:
Thanks for that Ciru75.Looked this up on the Revenue site :

The USC Rates & Bands from 1 January 2023 will be:

  • €0 – €12,012 @ 0.5% - no change
  • €12,013 – €22,920 @ 2%
  • €22,921 – €70,044 @ 4.5%
  • €70,045+ @ 8%
  • Self-employed income over €100,000: 3% surcharge
*Incomes of less than €13,000 are exempt from USC.

So , our USC on €117,500 total joint earnings and ARF would be €6195 as follows :

€12012 @ .5% €60.06
€10908 @ 2% €218.16
€47124 @ 4.5% €2120.59
€47456 @8% €3796.48

Total USC €6195.29

Can anyone tell me are my calculations correct ? Thanks very much
Click to expand...

USC is calculated separately for each of you with each of you having those full bands so the USC bill would be significantly less than that.
 
Ah yes. Thanks deadlyduck and Ciru75. I was assuming USC was calculated as if one person, good news so. I see how to do it now and it reconciles with taxcalc.ie to be fair.€3781 per anum). MY ARF Provider is deducting 8% on all mandatory withdrawals so I presume I can rectify this with my annual returns.e.g : my most recent gross monthly ARF withdrawal was €4597.90 with the USC deducted by the provider €367.83 , presumably a kind of "emergency" USC. Anually that would have been €4404 approx just on the ARF alone which is what confused me.
 
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