Working as a contractor tax q

[settlement]

I suspect i know the answer here but throwing it out there just in case.

I work as a contractor and my insurance is taken 'at source'
eg if i make 5k in a month, the client takes out 500 for insurance, and so I get 4.5k into my account.

I assume it is the full 5k that is taxable even though I never 'saw' it?

 

[jpd]

What do you mean by "insurance"?

Also, be careful - Revenue have strict rules defining who is a contractor v employee - do not fall on the wrong side

If your "customer" is deducting PRSI and Tax , then he is probably your "employer"

 

[AAAContributor]

I work as a contractor and my insurance is taken 'at source'

Is it Professional Services Withholding Tax (PSWT) you are talking about?

Professional Services Withholding Tax (PSWT)

Information for companies withholding Professional Services Withholding Tax

www.revenue.ie

If it is, you declare income of €5,000 in your income tax return and take a credit (€500) for the tax withheld, obviously multiplied by however many months you work for your client in the tax year.

 

[bmount]

I work on contract, what type of services is this, what is insurance exactly.

In my scenario this would be the commission that my agency takes, so they charge the client a higher daily rate than I receive. I invoice the agency, not the client directly therefore.

 

[AAAContributor]

I've got a new job which means I'm working as a doctor doing consultations for a company.

From the POV of my new job, all I can say is that they arrange my medical indemnity and deduct it from my invoices.

It looks like it is medical indemnity insurance cover that your client deducts.

€5k is your gross income. You take a deduction for your expenses of €500. Your taxable profit for the month is €4,500 which is subject to income tax, USC & PRSI (assuming there are no other deductible expenses pertaining to your sole trade).

 

[settlement]

I work on contract, what type of services is this, what is insurance exactly.

In my scenario this would be the commission that my agency takes, so they charge the client a higher daily rate than I receive. I invoice the agency, not the client directly therefore.

thanks, it is medical indemnity. so it is not like a commission

 

[settlement]

It looks like it is medical indemnity insurance cover that your client deducts.

€5k is your gross income. You take a deduction for your expenses of €500. Your taxable profit for the month is €4,500 which is subject to income tax, USC & PRSI (assuming there are no other deductible expenses pertaining to your sole trade).

Interesting. You are right - med indemnity. So even though it is simply an expense which I am taking at source, I am still only taxed on the 4.5k? Interesting and good news for me

 

[AAAContributor]

good news for me

Don't forget to take a deduction/allowance for your stethoscope!

 

[lff12]

Hmm - sounds odd - when I worked on contract for public sector organisations professional indemnification was part of the "package" offered by my umbrella company. The cost was included in the 5% or fixed rate cut I had (I moved from a percentage arrangement to negotiated down and finally switched to a fixed rate provider). You might want to get a full detail from your agency of what they are deducting and charging you as you can usually set this off against your own tax - unless they are already doing this for you?

 

[settlement]

Hmm - sounds odd - when I worked on contract for public sector organisations professional indemnification was part of the "package" offered by my umbrella company. The cost was included in the 5% or fixed rate cut I had (I moved from a percentage arrangement to negotiated down and finally switched to a fixed rate provider). You might want to get a full detail from your agency of what they are deducting and charging you as you can usually set this off against your own tax - unless they are already doing this for you?

Admittedly it's quite expensive, more expensive than being an employee and also when I was an employee my employer paid it. I dont think there is much detail, I am simply charged per hour for medical indemnity