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In relation to an individual's income, explain each of the following: Pay Related Social Insurance (PRSI) Universal Social Charge (USC) - Leaving Cert Home Economics - Question 10 - 2022
Question 10
In relation to an individual's income, explain each of the following: Pay Related Social Insurance (PRSI) Universal Social Charge (USC)
Worked Solution & Example Answer:In relation to an individual's income, explain each of the following: Pay Related Social Insurance (PRSI) Universal Social Charge (USC) - Leaving Cert Home Economics - Question 10 - 2022
Step 1
Pay Related Social Insurance (PRSI)
Answer
Pay Related Social Insurance (PRSI) is a compulsory deduction taken from an individual's gross income. It is designed to contribute towards social welfare benefits, which include pensions, maternity benefits, and other social supports. The costs of PRSI are shared between employees and employers, meaning both parties contribute to this fund. There are different classes of PRSI, each applicable based on the type of employment and other factors.
Step 2
Universal Social Charge (USC)
Answer
The Universal Social Charge (USC) is a compulsory tax levied on an individual's gross income before any pension contributions are deducted. It is calculated as a percentage of a person’s total income and ranges from 0.5% to 11%, with the rate increasing as income rises. Employees become liable to pay USC if their gross income exceeds €13,000 annually. However, those earning less than this threshold are exempt from USC.