With just one week to the preliminary tax deadline for the self-employed and anyone with a non-PRSI income, there is not much time left to raise the required tax payment. `Borrowing from Peter to pay Paul' - an apt metaphor in this case, is an unsatisfactory way to pay your preliminary tax because it leaves you open to the danger of building up an overdraft or loan that becomes more difficult to pay off - especially as the next year's tax bill looms over the horizon.
The Revenue Commissioners allows for a monthly direct debit of income tax, but requires that it represents 105 per cent of previous year's tax liabilities. Accountants prefer clients not to overpay this way, but admit that it may be the only practical solutions for someone who does not have the discipline to save.
The November 1st deadline is for the payment of preliminary tax that relates to income in 199798. The detailed tax statement you must file by January 31st relates to your income in the previous year 1996-97. The tax return that relates to this past year must be filed by the end of January 1999. (These convoluted deadlines are another good reason to hire the services of an accountant though your Inspector of Taxes will assist you in making a return.)
When estimating your preliminary income tax you should make sure that aside from reporting all your income sources you should claim all your deductions.
These include reliefs for:
Mortgage interest payments.
Personal pension contributions.
VHI/BUPA contributions.
Approved medical and dental expenses not refunded by private health insurance or medical cards.
Property, BES, film industry investment scheme.
Business related expenses which can be partly deducted for income tax purposes include:
Employee wages, including those to children helping out in the business.
The rental of a premises or room in your private home being used as an office or a portion of the running costs of the room.
Interest paid on business loans.
The cost of advertising.
Business costs like travel, stationary, equipment.
Motor expenses.
Bad debts.
Two of the best DIY guides to income tax self-assessment can be found in Colm Rapple's Family Finance (£5.95) and the 1997-98 Money Pensions and Tax Guide by the Taxation Advice Bureau (£7.45) the latter of which reproduces income tax Form 11.
