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In relation to a person's income, explain each of the following: Tax Credit ___________________________________________________________ USC ________________________________________________________________ - Leaving Cert Home Economics - Question 12 - 2018
Question 12
In relation to a person's income, explain each of the following: Tax Credit ___________________________________________________________ USC _______________________... show full transcript
Worked Solution & Example Answer:In relation to a person's income, explain each of the following: Tax Credit ___________________________________________________________ USC ________________________________________________________________ - Leaving Cert Home Economics - Question 12 - 2018
Step 1
Tax Credit
Answer
A tax credit is an allowance that reduces the amount of income tax a person has to pay. It is calculated based on a person's gross income, with the existing tax credits being deducted from the total tax owed. Notifications regarding the determination of tax credits and applicable cut-off points are issued annually by the Revenue Commissioners to each employee, ensuring that individuals are aware of the credits available to them.
Step 2
USC
Answer
The Universal Social Charge (USC) is a compulsory tax applied to a person’s gross income and is deducted before any pension contributions are calculated. The USC is calculated as a percentage of an individual's total income, with rates typically ranging from 1% to 8%. Employees become liable to pay USC if their gross income exceeds €13,000 annually, while those earning less than this threshold are exempt from paying this tax.