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Distinguish between the following taxation forms: Form P45 and Form P60 - Leaving Cert Business - Question 1 - 2009
Question 1
Distinguish between the following taxation forms: Form P45 and Form P60. (a) Form P45 is: (b) Form P60 is:
Worked Solution & Example Answer:Distinguish between the following taxation forms: Form P45 and Form P60 - Leaving Cert Business - Question 1 - 2009
Step 1
Form P45 is:
Answer
Form P45 is a document issued by an employer to an employee upon the cessation of employment. It contains important information regarding the employee's total earnings, the tax deducted, and the amount of Pay Related Social Insurance (PRSI) contributed during their employment. The Form P45 is required by the new employer when the employee starts a new job, as it helps the new employer to compute the correct amount of tax that must be deducted from the employee's earnings.
Step 2
Form P60 is:
Answer
Form P60 is issued by an employer to an employee at the end of the financial year (calendar year). It summarizes the employee's gross pay, tax paid, and PRSI contributions for that year. The Form P60 is crucial for employees, especially when they are claiming refunds for overpaid tax or PRSI contributions. It serves as a proof of income and taxation details and must be retained for tax records, particularly if the employee needs to verify information against their Tax Credits.