Making sense of wage slip and tax obligations, with DOMINIC COYLE

Q

I am a teacher, working casual hours (no contract) and so I am not being paid during the summer or other holidays. I do not have full timetabled hours so I hope to start doing some grinds/extra classes in September privately. I saw a letter in my staffroom from Revenue saying how we must declare all extra work as they are clamping down on nixers etc.

I obviously pay tax when being paid by the school.

I have two questions: Firstly, when looking at my pay slip I am being taxed superannuation, USC, PENS Related Deduct and PRSI. What do all these mean and do, and if I am not earning during the full year (I only get paid for the hours I teach), can I claim any back?

Secondly, I am afraid to have Revenue knocking on my door so how do I go about paying tax for the private classes/nixers? Do I claim self-employment?

The Revenue website is too complicated so I don’t know how to go about it.

- Ms AMcD, e-mail

A

Given that the second element of your question relates to an impending tax liability, let’s start there. You do need to return details of earnings outside the PAYE system to the Revenue. While the hours you work during the school year are paid through PAYE – together with the other deductions you cite, clearly cash-in-hand payments for grinds or private classes are not covered by that system and will need to be notified to the Revenue by yourself.

In general, people working in the PAYE system but earning additional income elsewhere use Revenue Form 12 to return details to the revenue.

For income earned in 2010, this form must be submitted (together with any tax and universal social charge due) by October 31st of this year.

If you are fortunate enough to earn more than €3,174 in a year outside the PAYE system, you must instead use Revenue Form 11, which is geared more to self-employed people. Some tax advisors suggest that if you are going to be filing annual returns (rather than a one-off), you might be better using Form 11 regardless of the amount as you can avail of more options, such as filing online.

The letter to which you refer was one of two sent to schools late last year. One was for the attention of teachers, reminding them of their obligation to file returns for all extra income earned outside the PAYE system – such as grinds, after-school study and extracurricular activity payments. The second letter went to schools and asked them to disclose payments they had made for such services – and for renting out school facilities – and to whom.

Getting back to the deductions on your payslip which are puzzling you, not all of these are “taxes”. Superannuation is your monthly contribution to your pension scheme as a public servant.

PRSI is effectively social insurance and is applicable to all workers in the PAYE system. Teachers (at least those first employed since 1995) pay PRSI at Rate A – 4 per cent. Assuming they have made enough monthly contributions, they can avail if necessary of a range of benefits such as unemployment, disability and maternity benefit and a State contributory pension.

The universal social charge (USC) is a new thing which replaced the old income levy and health levy. It is charged at rates of between 0 and 10 per cent, depending on the level of your salary. You may be entitled to claim some of this back as a casual worker.

Finally, the “PENS Related Deduct” is more commonly referred to as the “pensions levy” introduced in 2009. It is charged at rates between 3 and 10 per cent, depending on your salary level. You will not be entitled to any rebate for this.

This column is a reader service and is not intended to replace professional advice. No personal correspondence will be entered into.

Please send your queries to Dominic Coyle, QA, The Irish Times, 24-28 Tara Street, Dublin 2. E-mail: dcoyle@irishtimes.com