Time to make the most of tax reliefs

Looming cutbacks in the Budget may mean that refunds will no longer be available for some medical expenses, writes FIONA REDDAN

WITH FURTHER swingeing cuts expected in this year’s Budget, now is the time to make sure that you are maximising any tax reliefs available to you – given that come January they may no longer exist.

While the good old days of getting 41 per cent back on medical expenses if you pay tax at the higher rate may be gone – at least for most expenses – you can still benefit from a rebate of 20 per cent on many expenses you may have incurred during the year.

And remember, if you are submitting a self-employed tax return in the coming weeks, taking the time now to include your medical expenses in your return will help reduce your overall tax liability.

STEP 1: Work out your expenses

If you intend submitting a return now, you can claim for all medical expenses incurred during 2009, as tax relief can be claimed after December 31st of the year of the claim.

In addition, the Revenue will review claims for the past four years, so if you think you may be due a refund for any year from 2006 (as claims are made on a preceding year basis, claims for 2007 will involve expenses for 2006), get working on your claim.

But remember, up until 2007 the first €125, or €250 for spouse and dependents, of each claim was disallowed. Similarly, the total recoverable for prescribed medicines was €85 from 2005-2007.

However, as relief was granted at your marginal rate of tax (ie, up to 41 per cent) up to and including 2008, you can benefit from a greater rate of relief for these years.

When looking for a refund, you can make a claim on behalf of your immediate family or of a dependant.

Given that most relief is now only granted for most expenses at the standard rate of tax, you can work out how much of a refund you may be entitled to by deducting any reimbursements you have already received from a private health insurer, and then calculating 20 per cent of this.

So if, for example, you spent €3,500 on a variety of health expenses for your family in 2009, and you already received €1,500 back from your insurer, then, provided these expenses are eligible, you should be able to claim money back on the outstanding €2,000.

At the standard rate of tax, this would mean a refund of €400. If you received nothing back from an insurer, you could be entitled to a refund of €700.

The next step is to verify that these expenses meet the requirements of The Revenue Commissioners.

STEP 2: Determine what is eligible

According to The Revenue Commissioners, almost all medical expenses are eligible to be claimed against, provided that the expenditure was for the provision of healthcare – “prevention, diagnosis, alleviation or treatment of an ailment, infirmity, defect or disability” .

So, you can make a claim against expenses such as doctors’ and consultants’ fees, physiotherapy fees, speech and language therapy, routine maternity care, in vitro fertilisation and hearing aids.

Moreover, additional expenses such as medical treatment overseas and specialist food for coeliacs and diabetics are also included in the scheme.

If you paid nursing home fees last year, depending on the rate at which you pay tax you may be able to get relief on these at the higher rate – 41 per cent.

Unfortunately, despite the reduction in PRSI relief for dental expenses which was introduced this year, routine dental expenses such as extractions, fillings and teeth cleaning, are not eligible under the scheme. Similarly, opthalmic services such as eye check-ups, are not eligible. However, more specialised dental treatment, such as bridge work, root canal and periodontal treatment, as well as the extraction of wisdom teeth, is eligible for relief.

You can also look for relief on the cost of drugs and medicines. Any expense you have incurred in 2009, more than the €100 minimum a month under the Drugs Payment Scheme, is eligible for reimbursement, but remember that in your claim for next year this will go up to €120, as it was increased this year.

STEP 3: Submit your claim

There are a number of ways of submitting your expenses. According to the Revenue Commissioners, if you are a PAYE worker the quickest way of doing it is by logging on to the “PAYE anytime” section of revenue.ie.

Alternatively, you can download either a Med 1, or Med 2 form for dental expenses from the Revenue’s website, fill it out and send it to your regional Revenue office, along with evidence of payment of tax for that year such as a P60. If you are self-employed, you need to submit your medical expenses in your tax return form, which must be submitted by November 16th if you are using the online filing system.

While you don’t need to submit relevant expenses with your claim, you should keep all relevant ones for six years as they may be requested at a later date if your claim is selected for audit.