letter from revenue saying i underpaid tax for 2020

If you got the covid-19 payment, this like most employment social welfare payments such as jobseekers allowance, is taxable.

As the covid payment was correctly rushed so that people were not struggling, it was not connected into the pay systems of employers and therefore not taxed.

Were you on PUP during 2020?

I'd be fairly certain They would have issued a P21 statement.

Might be related to the initial Covid payment that wasn't taxed by employer.

Yes ring them to get them to explain.

Are they proposing to collect via reduction of tax credits for upcoming years as opposed to looking for a full payment now?

Have you followed the instructions in the letter? These are preliminary figures based on the information Revenue hold currently for you. When you follow the instructions and file your return as requested you'll get statements of liability providing you a breakdown of how any underpayment is calculated. While filing the returns you can also claim for any additional credits/reliefs to reduce any preliminary underpayments. You can of course declare any additional non PAYE income at the same time. The statements of liability will also state how any potential underpayments will be collected.

Sorry to bump this thread....I just received a letter from Revenue stating I underpaid in 2020, possibly as a result of Covid payment. They're looking for about a grand. I thought at the time I took the option to repay through reductions in payslip but I can't find proof of this. I'm a PAYE worker. Anyone else get any correspondence from them regarding Covid payment?

This.

Id look at making a payment into my pension of the same amount to see if you can offset it. I think you can apply a pension contribution to the previous year before end of October. At least you will have the benefit of it. Might be worth checking with your pension provider.

The option for collection of taxes due from covid payments was by way of reducing tax credits over coming years to effectively collect is available to Paye employees .

However, such employees with other sources of income, eg rental income, that are obliged to file a Form 11 cannot avail of this payment method

Yes as you're the assessable spouse they'll correspond with you on this. You could ask them to reduce your husband's tax credits instead. Just give them a call tomorrow (before theyclose the phone lines at 13.30).

They can but the tax underpayment won't be repaid by him of his income isn't sufficient enough to use his tax credits, so the underpayment will roll forward until recouped.

They will spread the underpayment over the next 4 years, so 2025 - 2028. You could ask that they split it 50/50 between you and see if that buys you extra time, depending on when his income becomes sufficient to repay the balance owed.

I don't know if they'll definitely do that but worth asking.

They take calls up to 1.00pm Monday to Friday.

The reduction will be around 700 a year, so circa 14 a week if paid weekly or 58 if paid monthly. Noticeable but obviously much better than the outlay of the full amount.

Do not change your joint assessment!!!!

You will pay less tax overall in the year if your spouse has a lower income, by being jointly assessed.

so i bit the bullet and completed the assessment for 2020, added in any Medical receipts/ uniform relief and got this back. apologies if this is a silly question (i did try find an answer online already ) but would anyone know how much will a reduction of approximately 690euro credits be reflected in my wages fortnightly ? (just to add i still intend to call the revenue to discuss )

on a side note, didn't think i would be eligible but applied for the mortgage interest credit for 2023 and was approved - around 1200 euro between us. if anyone not done it yet.