# How to calculate tax liability on Social Welfare Benefits?



## GreenQueen (24 Jun 2009)

AFAIK most social welfare benefits - jobseekers & illness etc are taxable.

I've tried to contact the Revenue Commissioners to clarify this situation but they don't seem very clear on it.

As I understand it the tax is payable at the lower rate (20%) on your income from social welfare benefits after you have deducted your tax credits.  So take the example of single person who is on a benefit for a full year (52 weeks) at the maximum rate with no dependents this gives them an income of €10,623.60.  If a single person has a tax credit of €1,830 and a PAYE tax credit of €1,830 combining to make €3,660 do they then have a liability at the end of the year for 20% of the remainder?

Have I got the wrong end of the stick on this?

Mods please move if it's in the wrong forum.


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## elcato (24 Jun 2009)

I dont believe they are taxable if you did not pay any tax during the same year or if you dot restart work before the year end. If you claim benefit say for 3 months during the year then for the full year it is deemed earnings therefor part of taxable income.


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## zippidydo (24 Jun 2009)

From returned form 12 before I had to get a statement of taxable income from social welfare in relation to jobseekers benefit earned in tax year and declared this amount of income to be taxed. Full amount of jobseekers is not taxable (only 17euro a week is exempt i think) but balance is taxable at 20% minus your tax credits.


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## callybags (24 Jun 2009)

Benefits are taxable, but only if they bring your total income for the year avove the exemption limit.
Currently  20K Single.
              40K Married.


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## Gervan (24 Jun 2009)

Those exemptions of 20k and 40k are for persons over 65. Under 65 exemption limits are much lower, €5210 for a single person, increased if there are dependant children.
A single person's tax credit plus Paye tax credit should mean no income tax liability where income is lower than €18,300. 
€13 of each week's unemployment benefit is not taxable.


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## GreenQueen (24 Jun 2009)

Okay so to sum up all your very helpful advice (thank you very much). I'm using the example of a single claimant with no dependants.

1. If a claimant only receives benefit payments for 52 weeks of the year they will not have a tax liability as their total income will be less than €18,300.

2. If a claimant is working in paid employment for part of the year and subsequently claims benefits, providing their total income comes to less than €18,300 in a tax year they will not have a tax liability.

3. If a claimant is working in paid employment for part of the year and claims benefits but their combined income (earnings, benefits & other income) is more than the €18,300 limit they will then have to pay tax on their benefits at the normal rate.

Have I interpreted this correctly?


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## justsally (24 Jun 2009)

GreenQueen said:


> 3. If a claimant is working in paid employment for part of the year and claims benefits but their income is more than the €18,300 limit they will then have to pay tax on their benefits at the normal rate.
> 
> Have I interpreted this correctly?


 
Not on their "benefits" as such but on income over the single persons limit of 18,300 (earnings, income + benefits)


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## GreenQueen (25 Jun 2009)

Thank Justsally I edited my interpretation above.


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## MC D (14 Aug 2009)

just came across this thread and have to admit i feel very stupid as i didn't relaise that illness benefit was taxable  . The situation is my wife has been on illness benefit for all of 2008 and still is on benefit please god she will be fit to go back to work in a few months and thankfully she has a job held for her . However i'm just wondering does anyone have any idea how much extra tax i will have to pay or how do i work it out . i rang my tax department today and they said the taxable benefit my wife received was €10000 euro so i assume i fill out the form 12 and just post it in and await the bad news  .


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## fobs (14 Aug 2009)

Just noticed this thread too. My husband is on an invalidity pension since last month. I am working full-time. Should I be paying tax on this benefit?


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## Black Sheep (14 Aug 2009)

Yes , you should contact the tax office and they will "code it in" to your tax credits but don't forget he will still be entitled to a PAYE tax credit. 
The PAYE tax credit will still be allowed next year even if he has no other income in 2010. (unless we have budget changes)


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## Black Sheep (14 Aug 2009)

Yes , you should contact the tax office and they will "code it in" to your tax credits but don't forget he will still be entitled to a PAYE tax credit. 
The PAYE tax credit will still be allowed next year even if he has no other income in 2010 onwards (unless we have budget changes)


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## MC D (14 Aug 2009)

Black Sheep said:


> Yes , you should contact the tax office and they will "code it in" to your tax credits but don't forget he will still be entitled to a PAYE tax credit.
> The PAYE tax credit will still be allowed next year even if he has no other income in 2010 onwards (unless we have budget changes)


 

Do i have to do the same black sheep ?


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## GreenQueen (14 Aug 2009)

Does it not depend on whether you were being taxed individually or as a couple?


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