TAX REBATES:OVER THE last few weeks, P60s have been landing on desks around the country. Most employees probably counted their blessings that the P was followed by a 60 rather than a 45, but nonetheless the certificate serves as a galling reminder of any pay cuts suffered in 2009, and of course their tax bill for the year.
For the first time ever, P60s were accompanied this year by a mysterious document outlining further deductions from employees’ hard-earned wages: an end-of-year income levy certificate for 2009.
Before shoving both of these undeniably dull pieces of paperwork into that special drawer reserved for unpaid bills and unopened credit card statements, take another look at just how much of your gross income vanished through income tax, PRSI and the income levy last year.
These deductions probably represent your biggest bill for 2009 (other than mortgage repayments), and chances are you’re being overcharged. The good news is that if you’re willing to spend a few hours investigating your entitlements, then you could see some of that money winging its way back to your bank account within a matter of days.
Not convinced that it’s worth spending your precious downtime grappling with the tax system? Then consider the facts: the average tax refund that Irish tax services company Taxback.com claims on behalf of its clients is between €840 and €860. And according to research carried out by the Irish Tax Institute, 40 per cent of Irish taxpayers are not claiming basic tax reliefs due to them.
So where to start? First of all, it’s worth checking that you haven’t overpaid the new income levy introduced on January 1st, 2009. Although this levy applies to most sources of income, there are a number of situations in which a taxpayer will be entitled to a refund. In fact, about 8,000 taxpayers have already applied to Revenue for an income levy refund.
Refunds can arise for a variety of reasons. For example, if a taxpayer switched employer during 2009, they may have overpaid the income levy, as details of the levy are not carried forward from one employment to another.
If your pay is lumpy due to payment of commission or bonuses irregularly, your income levy rate may have varied during the year – you could be due a refund of this, says John O’Connor of Red Oak Tax Refunds in his blog (blog.redoaktaxrefunds.ie/).
“If you worked with the same employer all year, then they should have calculated any overpayment after the year end and refunded it to you, but it’s important to check that this actually happened. Especially as this is new, mistakes will have been made by employers out there, so it’s really important to get the levy calculations double checked,” O’Connor warns.
Once employees have tackled the income levy, next up is income tax. Don’t make the mistake of assuming that Revenue is aware of the full details of your personal circumstances.
As an employee you’re automatically entitled to both the PAYE tax credit and the personal tax credit, both worth €1,830 in 2009, but it’s unlikely that your entitlements to tax credits and reliefs end there.
Dig out your tax credit certificate, which is sent out by Revenue every year, and check that you’re receiving your full entitlements.
According to a spokeswoman for Taxback.com, perhaps the most commonly overlooked tax relief is that available on certain medical and dental expenses incurred by the taxpayer (and their dependents) that have not been reimbursed to them through private medical insurance.
Tax relief on such expenses is available in 2009 at the standard rate of tax, which is 20 per cent, and at the higher rate of 41 per cent for prior years.
It’s possible to claim income tax refunds for the last four years, so for families with young children, this could add up to quite a sizeable rebate. Claims for medical expense relief can be made on a Form Med 1, available for download on revenue.ie. Individuals claiming tax relief on dental costs should ask their dentist to complete and sign a Med 2 form.
In terms of other commonly overlooked credits and reliefs, taxpayers who pay trade union subscriptions may not realise that they can claim an additional credit of €70 a year. Married couples may be entitled to the home carer’s credit (set at a maximum of €900 in 2009), if one spouse works in the home minding their children, or another qualifying dependent person.
Also anyone who tied the knot last year should contact Revenue to find out whether they are entitled to a tax refund arising from year-of-marriage relief.
Tax relief on service charges (including waste collection) is to be abolished from 2012 onwards, but in the meantime it’s still available. In 2010 taxpayers can claim relief at 20 per cent on bin charges paid during 2009. The maximum amount of relief is capped at €80.
One little-known deduction is the flat-rate expense tax credit available to employees in certain professions, such as teachers, nurses, engineers and journalists.
Sometimes this credit is automatically given to employees through payroll, but not always, so it is definitely worth checking. A list of qualifying professions can be found here: http://bit.ly/cioI31
Although the Irish tax system is extremely complex, claiming basic tax reliefs is straightforward. Taxpayers can make a claim by ringing their local tax office. A number of credits can also be claimed online by logging on to revenue.ie and registering for the PAYE anytime service.
However, if the mere thought of tackling your taxes or figuring out the minutiae of the income levy brings on a headache, then consider hiring the expertise of a professional tax adviser. Many tax refund companies operate on a no foal, no fee basis, so they will only charge a fee if they can secure a refund for you.
For peace of mind, check that your adviser is a registered tax consultant with the Irish Tax Institute before handing over your cash.
