Aaaaahhhh! It’s my P60!
So many numbers, so much information, I don’t understand it, I think I’ll file it away for now.
If you were working at the end of the year, you should be getting a copy of P60 in the next 1-8 weeks. So what should you be looking at?
Let’s look at an example P60 for singleton Corey Amos, an angst ridden musical type who had two jobs in the last year and doesn’t get the tax thing. What should Corey be looking for in his P60? Here are 5 things to look out for.
1. Is it Me? – P60 Personal Details
First up – an easy one for you highlighted in Green in the sample P60 below.
Check that your P60 has your Name and address right. Oh, and can you see the year 2010 on the top left? Nice. Finally, make sure your PPS number is correct. This should be 7 numbers and a Letter – but an extra letter at the end (a ‘W’) you need to get an updated PPS number from Revenue and give it to the payroll department.
2. Don’t charge me tax! – P60 Tax Credits
Now we’re getting into the tricky bits – check out the Tax Credits highlighted in Yellow.
So what difference does a tax credit make? Well, this is Revenue’s way of saying “We’ll let you off with the first bit of tax”. Let’s take an example to show this:
The starting point with Tax is you pay tax at 20%. So if you earn €10,000 they calculate gross tax of €2,000. Or you earn €20,000, they calculate gross tax of €4,000, just like we’ve shown below:
But see how this example works with the basic single person tax credits at an income of €10,000. Your Tax Credits of €3,660 cancel out your gross tax charge of €2,000, so you don’t pay a sausage.
But on €20,000, the Tax Credits cancel out most, but not all of your tax bill, so you pay a few quid.
Remember that the tax credits apply to all taxable income in the year – so if you have two or more jobs or incomes in the year, you don’t get any extra tax credits for that.
IMPORTANT! If your tax credits are wrong by €100 on your P60, you’ll overpay tax by €100 – And you will be due a Tax Refund. That’s what we are about. We find missing tax credits and incorrect tax credits and turn those into tax refunds to you.
3. Are you a High Earner? – P60 Tax Bands
Do you have to pay tax at the higher rate? – check out the Standard Rate Cut-off Point (SRCOP) highlighted in pasty pink in the example p60. (If you know the Technical term for this colour – let me know and I’ll update!)
So while the Taxman starts off by charging you at the standard rate of 20%, you might be considered a “High Earner” by Revenue and have to pay tax at the Higher Rate (Also known as Marginal Rate). In 2010 the Marginal Rate was 41% and the point at which a typical person was considered a “High Earner” and started paying tax at the higher rate was €36,400.
But if you are married and your partner doesn’t work or use all their standard rate tax banks, you could increase your tax bands. Let’s see how this works.
You can see now how important the Standard Rate Cut-Off Point is then – in this instance wrong tax bands on your pay and P60 could get you nearly €2,000 of a tax refund.
Tax bands can increase and decrease each year and based on your personal circumstances.
4. How much?! – P60 Pay & Tax
So you now know you are going to be charged tax at 20%, when you will be charged tax at 41% before Revenue apply your personal discount (Tax Credits). So how much does this work out at? Why not try calculating your tax charge for your pay level – check the important numbers in Blue on the Example P60.
We have highlighted Corey’s Total Pay and Tax for 2010. But this can easily be wrong if Corey has a second job as a musician, or his details from previous jobs as shown on the P60 are incorrect, or he had welfare income or …. as you can see there are many reasons a P60 may not show your full tax history for the year.
5. Is that a Tax? – P60 PRSI & Health Levy
So you now know how your income tax is calculated. But that’s not all. Your P60 will also show how much PRSI & Health Levy you are charged – these are both bundled into the same number and just labelled “PRSI” which is a bit lazy of the P60 design team you’ll agree.
The Employee PRSI calculation is really complicated here. But let’s get to the crux of the manner – you want to know if you are due any of this tax back. And the Key to this is the Social Insurance Contribution Class. If you have any weeks where the social insurance class has a “1” in it, then you’ll likely due a refund of Health Levy contributions if:
- You have a medical Card
- You earned less than €26,000 in total in the year from all jobs.
You may also be due a PRSI refund if you make pension contributions not through your employer.
2010 P60 – Claiming Tax Refunds
I hope that helps you understand your P60 better. It’s a bit of a dinosaur of a document and I’d like to see them change it a bit. But it is important to keep it, especially now with employers going bust and not making correct returns. If you would like us to check for 2010 tax refunds, include a copy of your 2010 P60 with our application form for the speediest of service.
best wishes,
John
Example P60 – Click to Open
https://www.redoak.ie/wp-content/uploads/2011/01/P60-highlighted.jpg
