Money Times - December 22, 2016
Posted by Jill Kerby on December 22 2016 @ 09:00
DEADLINE LOOMS FOR FOUR YEARS OF VALUABLE TAX REFUNDS
Are you short a few bob this Christmas? Are you dreading the credit card bill in January? Having trouble paying the mortgage/car insurance/electricity bill?
Then you may be in for an unexpected windfall – big or small – if you’re prepared to set aside a little time and make a little effort between now and 31 December…and claim a tax refund.
The Irish tax year runs from January 1st to December 31st. Anyone who is self-employed or has non-PAYE income is familiar with their big tax deadline – October 31st – when they must file and pay their tax due for the previous year. (Non-PAYE income includes share dividends, rental income, a capital gain from selling an asset.)
But the Revenue gives everyone one last chance for a refund, but that means getting the paperwork – on line is the fastest way – into them by 31 December, which happens to be a Saturday this year.
Last October (and cynics would say this is uncharacteristic of the nation’s taxman) the Revenue actually wrote to more than 137,000 PAYE workers who have not applied for any tax refund in the last four years. These people are on record for making some sort of claim some time before 2012, but the Revenue was suggesting that if they checked their pay slips and expenses receipts again, they may find that they have another refund coming for expenses they incurred since then.
And that’s the key message: we all have a four year rear window of past expenses refunds that can be claimed from the Revenue. They best known are for qualifying medical or dental expenses, for claiming some income tax relief on contributions to a pension plan, payments towards nursing home care for an elderly relative and for the hugely valuable Home Carer’s Credit of €1,000, which is payable to single earner couples with one or dependent people, including children under age18. (It was €810 up to 2015.)
So have you claimed for your family’s medical and dental expenses for the last four years, or for the special food or supplements they need or devices and even approved treatment done outside the state? (These must be expenses that have not already been paid by a private health insurance plan.) Anyone who has had root canal or a crown might see a €200 refund; €5,000 worth of braces for a child could net a working parent €1,000.
But what about claiming that 13.5% VAT back on the cost of putting in new windows or extending the kitchen under the Home Renovation Scheme that was introduced a couple of years ago? On a €20,000 renovation that’s a €2,700 VAT refund (albeit over a two year period). Did you need bridging finance to buy a home in the past four years? The interest you were charged can also be claimed. Some homeowners can also claim mortgage interest tax relief.
Meanwhile, if you’ve been in a private tenancy arrangement since 7 December 2010, this is your last chance you claim rent relief for the past four years. (It’s being withdrawn on a phased basis since 2011 and will be gone at the end of next year.) From 2012-2016, a single person under age 55 could have claimed a total, maximum tax credit of €720; singles and couples/widows under age 55 could have claimed a total, maximum tax credit of €1,440; married couples/widows over aged 55, €2,880.
Another refundable expense that people forget about is tuition fees (as opposed to the €3,000 “registration charge”) for qualifying undergraduate and post-graduate courses.
For example, a student (who pays income tax), parent, grandparent, godparent or even a friend picking up all or some of the cost of full-time fees at an approved college would be entitled to a 20% income tax refund up to a maximum €7,000 per annum. Unfortunately, the government includes a ‘disregard’ amount, which was €2,250 in 2012 and went up by €250 increments each subsequent year. (It is now €3,000). Nevertheless, for someone paying the maximum €7,000 per annum, four years of full time course refunds would still be worth €3,500.
Tax refunds can be made for having a guide dog, for being a seaman, or for work clothing expenses if you’re a nurse. If your employer picks up the cost of your health insurance, you can claim the 20% relief on up to €1,000 worth of the cost of the plan. (Individuals with health insurance get the tax relief at source.)
Nearly all tax refunds are paid at the standard 20% tax rate, though some – pensions, nursing home expenses – are paid at the marginal 40% rate.
So don’t delay. Check out the myAccount site on the Revenue’s website (www.revenue.ie). Make it a very Happy New Year.
Do you have a question for Jill? Please email her directly at jill@jillkerby.ie.