The broke college student: it’s a role we all recognise, and one that’s accepted as a rite of passage. But between registration fees, rent, living expenses and actually enjoying yourself, it can get you old, fast. So I’ve gathered together some of the best ways to help you stay smart with the funds you have – and maybe to find a bit more .. especially if you check the back of your sofa…
All things tax
Albert Einstein himself called income tax the most difficult thing in the world to understand – so the average college student could probably go on a crash course on the topic. For those of you working while studying, it pays to make sure you understand just what your entitlements are. Even if your part-time job doesn’t seem like it’s earning you a fortune, there’s a lot to be said for making the most of the money you make, and understanding your pay slips – because what you earn isn’t always what ends up in your pocket!
There’s a reason people say that life has only two certainties: death and taxes. Unless you are making the bare minimum in Ireland, you are obliged to pay tax. For most college students, this will be in the form of income tax – as an employee you will pay PAYE, or Pay As You Earn. Also included in the list of taxes deducted are PRSI (Pay Related Social Insurance) and USC (Universal Social Charge) It is deducted automatically from your earnings by your employer, so that by the time you receive your wages, those taxes have already been paid…. at least taken out of your pay packet and held for payment at a letter stage to the tax authorities.
Translating your pay cheque
| PAYE | Pay As You Earn: A method of taxation for employees based on what you earn… the more you earn the more income tax you pay. There are only two bands – 20% (for those earning less than € 34,550 in 2018) and 40% above this. Not many students will be lucky enough to reach this threshold. |
| PRSI | Pay Related Social Insurance: A type of tax used to cover welfare payments, such as the State Pension and Jobseeker’s Allowance. You only pay PRSI if you earn more than €352 per week. |
| USC | Universal Social Charge: This new tax was introduced in 2011 and is charged on your gross earnings before PRSI. Different rates apply depending on earnings; for instance, those earning €13,000 are not charged USC. However, for any income above €13,000, you will pay USC according to the following rates in 2018.
Earnings up to €12,012 – 0.5% Earnings €12,012 – €19,372- 2.00% Earnings over € 19, 373 and up to € 70,044 – 4.75% |
| Tax credits | These are credits which are offset against your tax liability. For students these would be Personal Tax Credit (Single) and PAYE Tax Credit of €1,650 each. |
So how do I measure up?
If you’re working part time, it’s unlikely that you’ll be earning more than €34,550 per year. This means any earnings you make will be taxed at the standard rate of 20% – but your tax credits will cushion the blow to a degree. Let’s take a look at how this breaks down for someone earning an average part-time wage of €15,000 per year in 2018.
| Total gross income | €15,000 |
| PAYE @ 20% | €3,000 |
| USC
€12,012 @ 0.5% €2,988 @ 2% |
€119.82 |
| Tax credits
PAYE …single tax €1,650 + €1,650 |
€3,300 |
| Total net income | €14,880.18 |
As you can see above, the PAYE income tax amounts to less than the tax credits to which you are entitled on a yearly income of €15,000, effectively cancelling out the tax you would otherwise be paying. So, the good news is that, while you may not be earning a fortune, you won’t be paying a fortune in tax either. And if you earn less than €13,000, you won’t have to pay anything at all – no income tax, no PRSI or USC..
Emergency tax
Those dreaded two words: you’ll usually hear them for the first time when you start a new job, get your first pay cheque and realise that it’s been pillaged by the most ruthless of taxes. The bane of many people’s existence, emergency tax can cause a lot of stress if you aren’t expecting it, or don’t know how to remedy it. Thankfully, it can usually be avoided if you’re quick off the mark and keep on top of your paperwork.
If you are starting your first job, make sure that you have registered the job with Revenue; they have a handy guide here that can help your onboarding process go as smoothly as possible, so that you can get your money into your hand ASAP. However, if you have left a previous job for a new one, make sure that you bring with you the P45 you’ll have been given by your previous employer, along with a statement of your tax credits. If you don’t have a tax credit certificate, you can download it from Revenue here. Make sure that you know your Personal Public Services number (PPS) and quote it wherever needed.
Claiming tax back
This can be one of the more confusing areas to figure out, but Revenue has thankfully improved its services in recent years, making the experience much more user friendly.
If you have been emergency taxed, you will automatically receive a refund in your next pay cheque after your employer has received an update tax credit certificate; or if you leave the job before that point, you can reclaim the tax yourself by contacting Revenue here.
There are plenty of companies advertising their services to assist in securing a tax refund for you – at a price. A word of advice? Check out Revenue Online Service first, and make a phone call to your local tax office; you can achieve an awful lot for free with your own efforts and a polite request for help!
Tuition fees – is there any kick-back?
In a word: yes, most third-level courses qualify for tax relief on tuition fees. Although this does not extend to registration, administration or examination fees, it can be a handy relief for those caught for tuition. 20% tax relief is available after the first €2,500 of full-time courses and €1,250 of part-time, to a maximum of €1,400 relief per year.
Grants
SUSI.ie (Student Universal Support Ireland) is the student’s secret weapon, in that many simply don’t know that its services are available to them. Grants are available to undergraduate and postgraduate students, mature students, independents or dependents (i.e. those relying on parents or guardians), as well as school leavers and those who have previously received a grant. There’s even a process for those who are studying outside of Ireland. The website has a handy ‘Eligibility Reckoner’ to allow you to quickly check whether you might qualify for a grant, without filling out endless forms and waiting weeks for a response. Last year, more than 83,000 of 105,000 applicants were approved for new and renewed grants – so even if you don’t think you qualify as it is means tested, there’s no harm in trying.
So, if you’ve made it all the way to the end of the article, well done! While tax and savings might not be at the forefront of your mind as you settle into another year of study, wrapping your head around some of the messier details of your earnings now will save you hassle in the long-run – and could save you money even sooner. Best of luck with your studies.