Tax on overtime pay

M

masterboy123

Registered User
Messages
440
Hi,

I have noticed i pay a huge chunk in taxes if i receive my overtime hours paid at a later date when it's accumulated with next month's overtime.

I got 56% in net pay of my Gross pay after taxes, USC, PRD, PRSI and pension contributions. So 44% deducted in taxes, etc.

On basic pay when overtime is not included I pay only 32% in taxes, etc.

My question is if overtime hours are paid on time and not accumulated for 2 months, will i cash out more money?
 
What's your basic salary, before overtime?
If it's over 33,800 you'll be paying higher tax rate on all overtime regardless of when it's paid.
 
It's about 55,000 basic pay plus extra for overtime. I got the impression that if overtime is paid correctly every month then I could save few bobs on taxes. Am i wrong here?

RedOnion said:
What's your basic salary, before overtime?
If it's over 33,800 you'll be paying higher tax rate on all overtime regardless of when it's paid.
Click to expand...
 
masterboy123 said:
Am i wrong here?
Click to expand...
It wouldn't make a difference to income tax as you're already in higher tax bracket.

However, it might be pushing you into the higher rate for USC.

But, PAYE and USC are both calculated on a cumulative basis, so if you overpay 1 month, it'll balance out the next (this is unless you're on a 'week 1' basis - on your payslip there should be a 'tax basis' if it says 'w1' or week 1 or something like that, then you're on week 1).
 
It says Tax Basis : N
And PRSI class A1

So I don't think I am on Week1 basis.

Hopefully the extra amount I have paid will be returned at the end of this year while filing out form 12.

I suppose it's just a myth at our work place that if 2 overtime payments are paid at the same time then you pay higher tax and loose your hard earned money
 
masterboy123 said:
Hopefully the extra amount I have paid will be returned at the end of this year while filing out form 12.
Click to expand...

Tax: If your basic salary is around € 55,000 then ALL of your overtime will be taxed at the higher rate of 40%
USC: you would need to be getting over € 1,000 overtime every month to push you up into the 8% band - otherwise USC is 4.75%
PRSI: Is deducted at 4%
 
Ok that explains why I got 56% paid and 44% gone away in taxes.

My question is if say in 1st month i got €500 on overtime and 2nd month I got €1100 in overtime.

If both overtimes are paid together in the 3rd month, will i loose money? If yes, could it be claimed back at the end of the year?

 

No. It will be taxed at the same level
 
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