Savings deposit interest increase income tax?

[sector_000]

If you have deposit interest income (with DIRT automatically withheld), can this increase the level of tax you would be liable for on your PAYE income??:mad:

Assume married (joint incomes), 2008 20% DIRT tax, €70K household salary.

If no deposit interest, then your marginal tax is still within the 20% bracket.

Now if you're lucky enough to have €20K of deposit interest... that pushes you into the 41% tax bracket... even though you'd have already paid €4K of DIRT.

Is this for real??
If it is, it makes the POST office savings rates much more attractive as you're saving 41% tax.

 

[Graham_07]

DIRT paid at the standard rate satisifes the individual's liability to tax. It does not push you into the higher rate as you get a corresponding increase in the standard rate cut off point.

 

[sector_000]

Thanks!
I just played with ROS form11 and you're right.

 

[dockingtrade]

If you're a PAYE worker and you do a tax return (because you have significant depsitn interest) like the self assessed wont the deposit interest then become subject to prsi & levys?

 

[Graham_07]

If you're a PAYE worker and you do a tax return (because you have significant depsitn interest) like the self assessed wont the deposit interest then become subject to prsi & levys?

Yes. PRSI & Health Contrib. Levy. Income subject to DIRT is not chargeable to Income Levy.