Around 420,000 people will be issued tax statements/bills because of payments they received under the two main Covid subsidy schemes in 2020 – Temporary Wage Subsidy (TWSS) and Pandemic Unemployment Payment (PUP).
This is partly because the TWSS and PUP payments were not taxed at source.
Revenue has confirmed that any tax liability will not be due this year, BUT taxpayers effected are being asked to file an income tax return for 2020 to finalise the tax liability or tax refund. Revenue has said it will be writing to all TWSS and PUP recipients on a phased basis over the year to request that a tax return is completed.
Filing a tax return for 2020 gives taxpayers the opportunity to claim credits/reliefs to reduce any tax due on the TWSS or PUP.
The amount of tax owed will depend on several factors, including personal circumstances and the amount TWSS or PUP received.
TWSS subsidy payments are liable to income tax and USC only and not PRSI. PUP payments are liable to income tax only and not USC or PRSI.
Although the option is available for taxpayers to pay any liability fully or partially through their online account with Revenue, taxpayers are not expected to make a lump sum payment. Revenue can collect the full or any remaining liability, interest free, by reducing tax credits over four years, starting in January 2022.
We would advise TWSS recipients to review the figures in the Revenue statement to ensure they are correct and in line with the TWSS payments received from their employer.
If you or your employees require our assistance in preparing and submitting a tax return for 2020 please do not hesitate to contact us.