Minimum Income for Tax Declaration?

P

Psyduck

Guest
Hi all,
I'm 19 years old, in college education, and recently started a summer job. I'm trying to fill out the 12A Tax Form at the moment. This is my first "official" job.

However, I have worked with another company (freelance work, I guess you could call it) for about two years. When I started two years ago I was made aware that:
1. The job was infrequent (e.g. nothing for two weeks, then 3 jobs in a week)
2. My gross yearly income from it would be low (around €2500, not bad for a 16 year old though!)

Because of this, I was told I did not need to declare the earnings for any tax purposes. I never really thought about it since, until I saw this 12A form and the "Details of any other income" section.

So, I have some questions before I can fill this thing out with a clear conscience:

  • - Was the advice not to declare the "freelance" earnings two years ago correct? Was I under some sort of minimum income threshold for declaration?

  • - If I am earning money now from another job, do I have to declare the freelance earnings now on the 12A form no matter what, or is there still some sort exemption limit I can avail of?


Additional Info:
I have been paid by bank transfer for two years.

From the company's point of view I am "subcontracted" (I'm about 90% sure of this).

After checking revenue.ie, I have seen that


  • - A person earning less than €35000 per year is exempt from income tax

  • - A person earning less than €352 per week is exempt from PRSI

  • - A person earning less than €4004 per year is exempt from the Universal Social Charge

I'm fairly sure I am currently below all three of these limits, but it still seems like the earnings must still be declared... I have yet to come across a minimum income limit for tax declaration.

I am embarrassingly ignorant of tax matters, but I do not want to commit some sort of tax fraud due to ignorance (I wish this stuff had been taught in school!).
 
Form 12a:-

"Details of other income" refers to the current year. Do not include income from previous years in this form.
 
Just a few points here.


  1. Its highly unlikely that you would have any sort of tax liability on freelance earnings of €2500 per annum, if you have little or no other earnings. Your annual personal tax credit of €1830 (up to & including 2010) or €1650 (for 2011) means that you can earn up to €9150 (up to & including 2010) or €8250 (for 2011) tax free per annum.
  2. The PRSI exemption of €352 per week applies only to earnings in employment, not to freelance work. There is a lower exemption of €3174 per annum for self-employment work.
  3. [broken link removed] is not a tax return, it is a form for claiming tax credits and cutoff point. If you want to declare earmings on a tax return, you must use Form 12 (google it for the appropriate year) or the more cumbersome Form 11.

For the record, the statement "A person earning less than €35000 per year is exempt from income tax" is unfortunately totally untrue. Almost all people earning that sort of money will be paying sizeable sums in income tax.
 
Rather than start a new thread, this one is very similar to my query.

I am working full time and the wife is a stay at home mum.
I am on the higher tax bracket.
I take all of her tax credits.
How much is she able to earn without it affecting my take-home pay?

If she were to take any credits back from me, it would reduce my take home, so would rather that did not happen. Also, if she were to take any credits from me, she would have to earn right up to a certain amout, probably the €8240 mentioned above so that we did not lose out.. If she earned a lot less than that, it would be more worthwhile me keeping the credit, as I would use it to the full amount.
 
If you choose to maintain the status quo in relation to how your tax credits and standard rate cut off point are allocated, your wife's earnings shouldn't affect your take home pay at all (subject to my comments below in relation to the home carer tax credit).

However, the PAYE credit (€1,650) isn't transferable between spouses so if your wife is entitled to it, she could earn €8,250 "tax free" (i.e. €1,650 x 5). Your wife should also be entitled to a standard rate cut off point of up to €23,800 (leaving you with the married persons SRCOP of €41,800).

You would however lose the home carer tax credit (€810) in the event that your wife returns to work (although a portion of the credit may still be available to you in the event that your wife's earnings are relatively low).
 
Thanks for all the replies guys :) I'm still a bit confused on one last point:
Am I right in thinking that even if I only earn €2500 in a year, I do need to declare that (on the form 12), even if I end up being exempt from all taxes? i.e. there is no minimum income you can earn before you have to declare it?
I'm aware that there does exist a minimum in most US states, but I can't seem to find a definitive yes or no for Ireland...
 
You must log in or register to reply here.
Back
Top