Simple Guide to PAYE Tax (Pay As You Earn)
Check out the answers to all the common FAQs about the PAYE system in simple terms.
What is PAYE?
In simple terms, PAYE means “pay as you earn”. The Pay As You Earn (PAYE) is a method of charging income tax, Universal Social Charge (USC) and Pay related Social Insurance (PRSI) on your income. Before issuing your paycheque, your employer will calculate the amount that should be deducted as your PAYE. This is a mandatory tax that needed to be reduced from your salary.
Is this a mandatory tax cut?
Yes. This is a mandatory tax that needed to be reduced from your salary.
When should I start paying this?
You have to start paying this whenever you start your registered employment in Ireland.
What should I do to initiate my PAYE?
You simply have to provide your PPS number to your employer and they will do the rest. Being a responsible employee, you need to make sure the registration process has been completed successfully.
Is it possible to reduce my PAYE contribution?
Fortunately yes, it is possible. Tax credits are a viable option. Your tax credits will be automatically applied to each of your pay periods, saving you money in taxes.
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What if I have overpaid my PAYE contribution?
You can claim a tax refund for up to four years afterward. Before initiating the refund, you have to update any tax credits you’re entitled to and also make sure you have updated the revenue of changes in your personal circumstance.
Hope you are able to grasp the fundamentals of the PAYE tax system. It has been assessed that every year a lot of people overpay their cut with or without knowing.
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