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Income Tax on €20,000 Thread

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  • 01-05-2006 8:55pm
    #1
    _Paul_
    Closed Accounts Posts: 20 ✭


    In this thread which I just noticed,

    http://boards.ie/vbulletin/showthread.php?t=2054865406

    and the poster asked about the tax on €20,000 from self employment compared to being a PAYE employee.

    They said that if a persons income from self employment is €20,000 then the tax would be,

    €20,000 x 0.20 = €4000
    - € 1,630 (single person tax credit)
    = €2370 TOTAL TAX


    But then Seamus said that "a self-employed person can claim back all work-related expenses, and they need only pay income on the remainder (i.e. on their "profit")."

    Maybe I've read the thread wrong, but I would have thought that the poster would have meant €20,000 profit from self employment after deducting their expenses? Therefore they can't deduct expenses again from their profit.

    I was just wondering if I'm reading the thread correctly?:confused:


Comments

  • Options
    #2
    MrPudding
    Registered Users Posts: 9,788 ✭✭✭MrPudding


    If you are working self employed or as a contract you can claim your reasonable expenses from the gross amount that you or your comapny is paid.

    For example, I am a contractor. Lets take a really simple example, say I invoice €1000 in one month and I have €200 in expenses. When the company I have invoiced pays me I write a company check for €200, I then take the rremaining €800 as salary. I will only pay tax on the €800.

    A PAYE employee would take the whole €1000 as salary and therefore pay tax on all of it.

    MrP


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