Embarrassingly basic tax question (self-emp)

C

Capital

Guest
I'm not a numbers person at all. That much will become clear.

I made sod-all last year (less than 10k after expenses). I'm self-employed, single, 41 and renting. No kids. I know about the €1830 tax credit but is there another 'amount up to which I can earn and pay no tax' or am I paying 20% on everything (less my tax credit)?

On the Revenue.ie site it says:

Exemption limit for Single/ Widowed 65 years of age or over = €20,000.

I'm assuming this magical €20k figure is something different altogether?

Many thanks,

Capital
 
If your income is under €20,000 AND you are over 65, then there is no tax to pay.

Not sure about Income Levy though
 
Ah. OK, I read the single/widowed bit wrong. The first question still stands though!
 
It depends.

Were all of the expenses deductible for tax purposes?

Also, the credits were reduced by approximately 10% in the last Budget (you should be entitled to a single persons credit of €1,650 for 2011).

You should also be entitled to a rent credit of €320, so I suspect that if all of your expenses are deductible for tax purposes you should have no income tax liability. PRSI and universal social charge should arise however (at 4% and 2% respectively).
 
Gekko said:
It depends.

Were all of the expenses deductible for tax purposes?

Also, the credits were reduced by approximately 10% in the last Budget (you should be entitled to a single persons credit of €1,650 for 2011).

You should also be entitled to a rent credit of €320, so I suspect that if all of your expenses are deductible for tax purposes you should have no income tax liability. PRSI and universal social charge should arise however (at 4% and 2% respectively).
Click to expand...


Thanks Gekko. As far as I know, yes. I work from home so expenses were mainly a percentage of rent and utilities.

So there's is no set amount that I can earn tax free apart from expenses and tax credit?

I'm new to this game as you may have guessed...
 
They 1830 tax credit means you can earn 1,830 * 100 / 20 = 9,150 pa before paying income tax
 
Capital said:
Thanks Gekko. As far as I know, yes. I work from home so expenses were mainly a percentage of rent and utilities.

So there's is no set amount that I can earn tax free apart from expenses and tax credit?

I'm new to this game as you may have guessed...
Click to expand...

Be careful here.

It can sometimes be a case of "penny wise/pound foolish" when it comes to claiming a percentage of your home utilities for business purposes.

Assuming that you own your home and that you crystallise a gain when you sell it, the gain is normally not subject to capital gains tax because of principal private residence relief ("PPR relief").

However, if you use a portion of your home for business purposes, the PPR relief is diluted and capital gains tax may arise.

Someone can end up saving a few hundred Euro on the income side of things and costing themselves thousands of Euro down the line when they sell their home.
 
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