DIRT Tax and aged over 70. Moving from An Post products.

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Tintagel

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Both myself and my wife are aged over 70.

At the moment we have our savings in the An Post NTMA accounts and Prize Bonds.

My understanding is that these products are tax free. Interest and prizes.

The return on both out NTMA products and Prize Bonds is terrible. We have €400k in Prize Bonds, producing wins of about €600 a year. We have a further €200k in NTMA products that is returning practically NIL interest. This money has been in these products for years.

Now that the mainstream banks are offering up to 2% on fixed term accounts we are considering cashing in our NTMA and Prize Bonds and moving back to the mainstream banks and opening a fixed term account for one year.

The gross interest on investing €600k will be €12,000 in interest.

I assume that we will have to pay DIRT tax on all the interest and our age does not come in to it. Is this correct?

We both have two very small private pensions and the State pension.

We will be receiving about €8000 net interest if we do the switch and this will add to our annual income. In addition to paying DIRT tax on the interest will we also be paying income tax on the additional income from interest?
 
As you are over 65, then there is no income tax due as long as your annual income is below € 36,000 - this includes pension and interest
 
jpd said:
As you are over 65, then there is no income tax due as long as your annual income is below € 36,000 - this includes pension and interest
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If my annual income is €35,900 I pay no DIRT tax. If my annual income is €36,100 do I pay full DIRT tax or is there some pro rata reduction?
 
Tintagel said:
In addition to paying DIRT tax on the interest will we also be paying income tax on the additional income from interest?
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If a person received €1 in interest they will pay DIRT tax of 33%. They then have to include this interest in their tax returns as income?
Let's say they are on tax rate of 20%. Do they end up paying 53% tax on this €1 interest earned overall? (33c + 20c).

Also is the interest earned taxed again as income on the gross rate earned, €1 or is it taxed again at the after DIRT amount of 67c?
 
The DIRT tax is all the tax levied on interest payments
You have to include the gross amount of interest earned ie the € 1 above on your tax return under the relevant heading. No further tax is due
 
jpd said:
The DIRT tax is all the tax levied on interest payments
You have to include the gross amount of interest earned ie the € 1 above on your tax return under the relevant heading. No further tax is due
Click to expand...
Thanks.

So after paying DIRT tax you don't have to pay income tax on this interest earned.....but it could affect various thresholds if applying for a GP card or other social welfare services?

Does it affect in any way your tax situation as in allowances received etc.?
 
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