Tax on income from second career?

S

Slim

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Hi all. This question is about my upcoming plans and I would appreciate advice from the forum on tax issues.

I will probably retire from my occupation towards the end of the year with almost full pension. The reason it is 'almost' is that I will retire a couple of years younger than the minimum for my occupation. My wife will also retire this year with less than full pension.

I have the opportunity to work part-time with a former colleague in an area of our shared expertise. This is an unexpected opportunity which has just come up. My expectation is that it would bring in between €10-25k in a full year. So far so good! The issue is;
between my and my wife's pension and her PRSA drawing, we will probably receive about €54k in pension in a full year. That leaves about €14k before we hit the higher tax rate. I would be comfortable earning only the €14k or so but that may depend on demand etc.

So, how should I deal with the additional employment in a tax efficient way? Should I just lump it in with pensions in Form 12 or should I set myself up as self employed? I will not be employed by my former colleague but will work on an 'as needed' consultant basis(self employed).

I will post also on Pensions with regard to a possible PRSA. Many thanks, Slim.
 
As a follow on question, to which I hope someone will answer:

If I do the consulting work on a few days in late 2018 and do not get paid until Jan 2019, can I include that in my tax return for 2019(probably more beneficial) or do I have to return it as earned in 2018? I have no wish to do anything but comply with the tax law. Slim,
 
Slim said:
As a follow on question, to which I hope someone will answer:

If I do the consulting work on a few days in late 2018 and do not get paid until Jan 2019, can I include that in my tax return for 2019(probably more beneficial) or do I have to return it as earned in 2018?
Click to expand...

2018.
 
Slim said:
The issue is;
between my and my wife's pension and her PRSA drawing, we will probably receive about €54k in pension in a full year.
Click to expand...

I'm speculating a bit here that your wife is a member of an Occupational Pension Scheme of some sort (public service?) and has an AVC PRSA to supplement her benefits. If she's under 60, she's not obliged to draw an income from the PRSA. So she could defer drawing the income from the PRSA and thus allow you to earn more without hitting the high rate. In the year in which she turns 61, she must start taking an income of at least 4% of the fund value.

Regards,

Liam
http://ferga.com
 
Thank you both for your responses. If l could clarify:
Pension(me)..37k
Pension(her)..17k (occupational, not including any prsa draws)
Total: 54k.

My understanding is that l could earn up to 11k extra income in a full year and we would stay in the 20% tax bracket[48k plus second income of 17k]. Is this correct or would Revenue allow me to include up to 14k to the band max of 68k? Nice problem to have, l know!
 
Slim said:
Thank you both for your responses. If l could clarify:
Pension(me)..37k
Pension(her)..17k (occupational, not including any prsa draws)
Total: 54k.

My understanding is that l could earn up to 11k extra income in a full year and we would stay in the 20% tax bracket[48k plus second income of 17k]. Is this correct or would Revenue allow me to include up to 14k to the band max of 68k? Nice problem to have, l know!
Click to expand...
The maximum amount you can earn at the standard rate is €43,550 plus the second income up to a max of €25,550.
 
Ciru75 said:
The maximum amount you can earn at the standard rate is €43,550 plus the second income up to a max of €25,550.
Click to expand...
Ah, thanks! I had misrembered the cut off point. To summarise then, even though we are jointly assessed, the cut off will still apply? Slim
 
Sorry to drag this up again but the advice is much appreciated. So:
Me: Pension 37k Additional earned income in 2019, est 25k(after expenses) (I will open PRSA and deposit 30% probably)
Wife: Pension 17k - no need to draw income from PRSA but can. Am I right in thinking:
Me: Tax on 43550 = 20% plus USC etc: We pay 40% on all above that in respect of my earnings?
Her: Tax on 17k plus drawing of 8,550 = 20% tax plus USC etc.

Is this correct?
 
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