The ordinary taxpayer has a vast amount of tax credits and allowances available to soften the blow of their mandatory pay check deductions. However, each year the pockets of the Irish Exchequer are lined by millions of euro as a result of people not claiming back their full entitlements.
The tax system can appear complex and confusing to the uninitiated, with many people only interested in what they receive Net each week. As a result, they are potentially missing out on hundreds of euro rebate every year.
Help is at hand in the form of your local Revenue officers. Simply get your tax affairs in order, give them a call, and they will be happy to help.
Most people are familiar with the more common tax credits such as rent allowance and single and married persons’ tax credits, but there a number of less well known tax credits that may be available.
Below is a summary of the more common tax credits available that continue to remain unclaimed by some taxpayers. Are you entitled to any of these?
Employee Tax Credit Known as the PAYE tax credit, you may claim this credit if you are an employee, in receipt of an employment pension or in receipt of a social welfare pension. This tax credit is not available in respect of salary of a proprietary director of a company from that company.
Are you or your spouse a stay at home parent/ carer?The Home Carer’s Tax Credit of €900 is available to married persons who are jointly assessed and where one spouse works at home to care for children, the aged or incapacitated persons.
Do you claim back on your medical and dental expenses?You can claim back tax on certain medical, dental and drug expenses incurred by yourself, your spouse or your dependents. With effect from 1 January 2009 income tax relief is available at the standard income tax rate. An example of where this tax relief is often overlooked is orthodontic treatments.
Do you claim tax back for your medical insurance?Relief is available in respect of premiums paid to an authorised insurer (VHI, BUPA etc) at standard rate of income tax. Most insurers operate tax relief at source on premiums.
However, if your employer pays your premium you will not receive the benefit of the credit and therefore you are entitled to claim the tax credit from Revenue.
Permanent Health Benefits SchemesPremiums and other contributions under permanent health insurance schemes are allowed as deductions for income tax purposes.
Do you pay for membership of a trade union?You may claim this tax credit if you pay subscriptions to a trade union. The full credit of €70 may be claimed regardless of the actual amount of the subscriptions paid.
Are you renting accommodation?Tax relief at the standard rate may be claimed if you pay rent in respect of rented residential accommodation that is your sole or main residence.
For the tax year 2008, the maximum credits available are as follows:
| Persons under 55 years | Max Tax Credit | Rent Limit |
|---|---|---|
| Single | €400 | €2,000 |
| Married/Widowed | €800 | €4,000 |
| Persons 55 years and over | Max Tax Credit | Rent Limit |
| Single | €800 | €4,000 |
| Married/Widowed | €1,600 | €8,000 |
Are you renting a room in your private accommodation?
You may be entitled to rent relief. You can rent out a room in your home and the income is exempt from tax up to a limit of €10,000 in 2008. This will not affect your mortgage interest relief.
Are you paying 3rd level tuition fees?
You may claim tax relief at the standard rate for certain third level tuition fees, for either yourself or dependents. A list of approved colleges and courses is available from Revenue. The maximum limit for qualifying fees is €5,000 for the academic years 2005/06, 2006/07, 2007/08 and 2008/09.
Training Courses Fees
Tax relief at the standard rate may be claimed in respect of tuition fees ranging from €315 to €1,270 in respect of approved training courses in the areas of information technology and foreign languages. To qualify for the relief you must receive a certificate of competency on completion of the course.
Do you pay Local Authority charges?
Tax relief at the standard 20% can be claimed on local authority charges on your residence.
The maximum service charges on which the credit may be claimed is €400. This relief is granted to those who pay their service charges in full and on time in the previous calendar year. Local authority charges include bin charges, domestic sewage disposal, domestic water supplies and private refuse collectors.
Are you widowed?
If you are a widowed person whose spouse has died in a given tax year you are entitled to the widowed person’s “bereaved in year” tax credit of €3,660 for that year. A widowed person is also entitled to an additional tax credit of €2,430 in subsequent tax years if there are no children.
If a widowed parent has dependent children, they can claim a “widowed parent’s tax credit” for 5 years after their spouse’s death. They may also be entitled to the “one-parent family tax-credit” for as long as their children remain dependent.
Are you a single/one-parent family?
You may be entitled to this tax credit if you have dependent children and are widowed, unmarried, separated, divorced, or deserted. This will be in addition to your personal tax credit. Your standard rate tax band will also increase, meaning you can earn more before entering into the higher tax bracket. The credit is not available to an unmarried couple who are living together.
Are you or your spouse over 65?
If you or your spouse is over 65 you can avail of an Age Credit which is €325 for a single person or €650 for a couple.
Do you care for an incapacitated child?
You will be entitled to this tax credit if you have living with you at any time during the tax year a child who:
(i) is under 18 years of age and is permanently incapacitated by reason of mental or physical infirmity, or
(ii) if over the age of 18 is permanently incapacitated from maintaining himself, and was so before he reached the age of 21 years, or was in full-time education at the time he became permanently incapacitated.
If your dependent relative incurs health expenses and you contribute to them, you may be entitled to claim tax relief for the amount you paid. You can claim relief on expenses like doctors’ bills, hospital treatments, prescribed medicines etc.
The credit is available for each qualifying child.
Do you care for a dependent relative?
This credit is claimable if you maintain at your own expense:
(a) a relative of you or your wife who is incapacitated by old age or infirmity from maintaining himself, or
(b) your or your wife’s widowed mother, or
(c) your son or daughter who is resident with you and is dependent upon you by reason of old age or infirmity.
Like the incapacitated child credit, if your dependent incurs health expenses that you contribute to, you may be entitled to claim tax relief on the amount you have paid.
If the income of the dependent relative exceeds a specified limit no tax credit is due. For the tax year 2008 the specified limit is €13,473.
If your dependent relative is living in an approved nursing home and you contribute to the nursing home fees, you may also be entitled to claim some of the expenses involved.
Do you employ a person to take care of an incapacitated relative?
This credit is claimable if you employ a person to take care of a family member who is totally incapacitated by old age or infirmity. The tax relief is available on the amount paid to the carer, up to €50,000.
Are you entitled to the blind person’s tax credit?
This credit is claimable if you or your spouse is blind. If you are both blind, the credit will be doubled.
There is also an additional allowance of €825 at the marginal rate (41%) available for a guide dog.
Do you donate more than €250 a year to charity?
If you make a donation of €250 a year or more in any one tax year to eligible charities, you can avail of tax relief. This tax relief will be applied to these donations at the donor’s marginal rate of tax. Donations less than €250 do not qualify for relief.
If you are entitled to any unclaimed tax credits or reliefs then you should contact your local Revenue office immediately. The time limit for claiming a refund from Revenue is 4 years from the end of the tax year for which the refund is due.
Alan Moore Tax Consultants
*Michael Furlong is a Partner with Alan Moore
Tags: finance tips, money saving tips, tax
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