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Paying too much Tax! Any way to reduce it?

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  • 02-02-2019 1:02pm
    #1
    TestLink
    Registered Users Posts: 776 ✭✭✭


    Hi,
    Both myself and my wife are working. My salary is around 43000 and my wife salary is 45,000 per annum. My wife has the full tax credit. All the bills are going from my wife's account. I am paying around 750 euro tax per month. What is the best way to reduce this tax amount?

    My Fortnightly Salary Slip details:
    Reg Pay : Euro 1612
    PAYE: 340
    PRSI CL A:64
    Super Annuation:70
    USC:46
    ASC:25

    Can I join an AVC or some thing like that so that that amount is gone / save money before tax?

    Do I need to contact any tax consultant or accountant? If yes, any suggestions?
    Tagged:


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    #2
    Stheno
    Moderators, Business & Finance Moderators, Science, Health & Environment Moderators, Social & Fun Moderators, Society & Culture Moderators Posts: 51,687 Mod ✭✭✭✭Stheno


    You s should have a PAYE credit on your pay slip? Are you in the public sector?


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    #3
    TestLink
    Registered Users Posts: 776 ✭✭✭TestLink


    Stheno wrote: »
    You s should have a PAYE credit on your pay slip? Are you in the public sector?

    Yes, I am working in Public Sector.

    From my Salary slip:
    COP Basis :1
    Tax Credit: 63.46

    Hope this helps.


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    #4
    coylemj
    Registered Users Posts: 25,416 ✭✭✭✭coylemj


    Stheno wrote: »
    You s should have a PAYE credit on your pay slip?

    OP said his wife 'has the ful tax credit' which I take to mean that she has the credit for the pair of them.


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    #5
    Dial Hard
    Registered Users Posts: 13,644 ✭✭✭✭Dial Hard


    coylemj wrote:
    OP said his wife 'has the ful tax credit' which I take to mean that she has the credit for the pair of them.

    I thought that was done away with when individualisation came in a few years ago?


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    #6
    TestLink
    Registered Users Posts: 776 ✭✭✭TestLink


    coylemj wrote: »
    OP said his wife 'has the ful tax credit' which I take to mean that she has the credit for the pair of them.

    Yes, HR adviced me to have individual tax credit. But at the end of the day "Total Family income" is same. So I want to keep it that way.


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    #7
    endacl
    Registered Users Posts: 22,291 ✭✭✭✭endacl


    Have you checked all allowable deductions? Are you entitled to claim flat rat expenses? If so, you can claim for the previous four years.


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    #8
    TestLink
    Registered Users Posts: 776 ✭✭✭TestLink


    endacl wrote: »
    Have you checked all allowable deductions? Are you entitled to claim flat rat expenses? If so, you can claim for the previous four years.

    I want to save money every month rather than paying huge tax. Is there any way to invest money in something before tax is cut. What abt AVC?

    Any other way?


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    #9
    namenotavailablE
    Registered Users Posts: 59,602 ✭✭✭✭namenotavailablE


    Contributing to a PRSA/ AVC will save you PAYE (no PRSI or USC savings). Also, if it's practical, you can avail of the cycle-to-work scheme which saves on everything, including PRSI and USC. It also reduces employer's PRSI, which is a selling pitch you can make to the employer.

    Free Excel net pay calculator- https://taxcalc.eu/monthlyss/Employee%20PAYE%20calculator.xlsm



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    #10
    TestLink
    Registered Users Posts: 776 ✭✭✭TestLink


    namenotavailabl wrote: »
    Contributing to a PRSA/ AVC will save you PAYE (no PRSI or USC savings). Also, if it's practical, you can avail of the cycle-to-work scheme which saves on everything, including PRSI and USC. It also reduces employer's PRSI, which is a selling pitch you can make to the employer.

    May I know which company offers the best AVC. My wife is with CornMarket for her AVC.


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    #11
    namenotavailablE
    Registered Users Posts: 59,602 ✭✭✭✭namenotavailablE


    Afraid I don't have an answer for that- sorry.

    Free Excel net pay calculator- https://taxcalc.eu/monthlyss/Employee%20PAYE%20calculator.xlsm



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    #12
    ahnowbrowncow
    Registered Users Posts: 2,571 ✭✭✭ahnowbrowncow


    Paying into an AVC will reduce your tax paid but it will also reduce your net pay.

    Plus you also have to pay tax when drawing down on your AVC in the future so it won't prevent you from paying tax on your AVC contributions. You might only have to pay tax at the standard rate when you do draw down but is it worth reducing your net pay for years and years to do that?


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    #13
    coylemj
    Registered Users Posts: 25,416 ✭✭✭✭coylemj


    ahnowbrowncow wrote: »
    Plus you also have to pay tax when drawing down on your AVC in the future so it won't prevent you from paying tax on your AVC contributions. You might only have to pay tax at the standard rate when you do draw down but is it worth reducing your net pay for years and years to do that?

    That is factually correct but I would add two points in favour of investing in an AVC ...

    1. The capital gains and dividends earned by an AVC fund are accumulated tax-free. While it's true that your money is locked away until you retire, an AVC fund will produce a decent return on investment, unless you elect for a conservative fund.

    2. Lots of people in the private sector use an AVC fund to generate a tax-free lump sum which they can take at retirement. The alternative is to commute part of your pension to a lump sum which is usually a bad idea. So you may end up paying no tax at all on the AVC fund.


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    #14
    TestLink
    Registered Users Posts: 776 ✭✭✭TestLink


    Please see my attached docs. Hope this would make my situation clear.


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    #15
    coylemj
    Registered Users Posts: 25,416 ✭✭✭✭coylemj


    You appear to be a pretty standard setup. The only thing to watch for is that both of you make sure to use all of the standard rate band. That means your wife needs to be making at least €45K, otherwise some of the 20% band would be unused. But as you probably asked for the allocation shown in the cert - 26K to you and 45K to her, I assume you've covered this already in your calculations.


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