Most people assume that their employer will sort out all their Income Tax, PRSI and Universal Social Charge (USC) for them as part of their payroll. But, errors can occur – and it’s these errors that we have noticed recently particularly affecting teachers.
Over the past couple of weeks, we’ve had a couple of cases involving teachers who now owe Revenue money as their USC was charged at the incorrect rate – here’s what happened.
Changes to Medical Card exemption for USC
In 2012, if you held a medical card, you were exempt from the higher rate of USC (7%) regardless of your salary level. So, the highest level of USC you have to pay is 4%.
But, this changed in 2013, and the USC exemption was only available to those with salary levels below €60,000. So, if you had a salary of €59,000, you still only pay a maximum of 4% USC. But, if your salary is €60,000 or more, your whole salary above €16,016 is subject to a USC of 7%.
Underpayments as a result
In the cases we have seen, teacher holding medical cards with salaries above the USC limit of €60,000 are being incorrectly charged at the lower 4% rate in 2013 through their payroll. This has a huge impact as it results in an underpayment of €300 for every €10,000 they earn above the €16,016 threshold.
It’s not clear whether this is still happening in 2014, but if it is, teachers could be adding a further underpayment of €146 worth of tax each month.
We have raised this matter with representative bodies to alert their members and hopefully take action to correct this.
Get your taxes checked!
We are encouraging all teachers earning over €60,000 to double check their USC rates with their payroll. However, it’s always a good idea to get your taxes reviewed annually to make sure there’s no overpayments (or worse, underpayments!).
We can do this for you and save you the time and hassle of trying to learn the Irish tax system! All you have to do is Apply Now!
Written by John O’Connor
I’m the brains trust behind Red Oak Tax Refunds and started the company in 2009 because I thought there had to be an easier option for people wanting their taxes reviewed. My job is to make sure our team of Tax Agents have the latest information to help ensure our customers get the best possible refund outcome. I love numbers, but realise not everyone does!