Five easy ways to get your tax back
Millions of euro go unclaimed as many people think the tax system is too complex. Sinead Ryan guides you through the maze
Forget water charges, property tax or a parking ticket. No communication puts more fear into people than one from Revenue Commissioners.
So how good must it feel to see money coming the other way - back into your pocket from theirs? It's amazing how many people simply don't know about or apply for the myriad tax reliefs, credits and grants available to them. Perhaps it's the belief that successive budgets have all but culled the tax refunds available, but in fact, there are still dozens that most people can claim every single year.
In 2013 400,000 people got refunded €151m in health expenses for instance, while 28,200 got €21m back on third level tuition fees. Every year millions of euro go unclaimed as people think the system is too complex, they don't know about the relief or feel that the very contact with Revenue will create a 'red flag'. But it's your money, not theirs, so why the reluctance?
There are three ways Revenue refunds money:
1. Tax relief, which reduces the amount of tax you have to pay, often directly at source, like mortgage interest relief.
2. Tax credits are calculated as a percentage of your income effectively reducing your tax by the amount of the credit. Examples include personal tax credits, lone parents or widowed persons credit etc.
3. Grants are direct payments for something, e.g. college fees via the SUSI scheme or a housing rental payment. They are normally means tested.
Revenue has gone through many changes over the years; they have streamlined, become more efficient (not always good for your pocket!), and happily, gone fully online. One of the best things you can do is sign up for PAYE Anytime service (or ROS if you're self-employed) which allows you to apply for credits, reliefs and grants without all the paperwork. Most leaflets, forms and applications can be sent out via email or a low-call telephone number.
Some reliefs which used to be available have been stopped altogether, but even so, back-claiming is allowed for four years on many, so it's worth making the claim anyway.
The top five ways to get a refund (apart from the automatic ones) are:
1. Flat Rate Expenses
A tax credit is available just for doing your job. Revenue allows a variety of sums for uniforms, overalls, tools and equipment. It applies to many jobs you might not realise - there are literally hundreds of them, including: Bar staff (€93), Firefighters (€272-407), Actors (€750), Waiters (€64-97), Journalists (€153-381), Nurses (€80-733), Teachers (€518) and members of the RTÉ Orchestras (€2,476).
2. Medical Expenses
You can claim back every single expense from doctor visits, medicines, equipment, special dietary foods and procedures. There is no excess but you must first deduct any payments received from another source, e.g. health insurance. Tax relief is on the balance at 20pc. Included is the €144 monthly drugs charge payable by those under the Drugs Payment Scheme (DPS). You must retain receipts for up to six years but do not need to send them in to make a claim.
Total family expenditure 2014 €2,345.
VHI refund: €500
Some non-routine dental expenses are covered such as crowns, bridge-work, braces etc, even if treatment takes place outside Ireland as long as it's a 'qualified' practitioner. Tax relief is available on private medical insurance to a maximum of €1,000 p.a. at 20pc (i.e. €200). You can download a Health Expense Tracker from Revenue to diary your expenses.
3. Tuition Fees
There is tax relief available on fees payable for third level students calculated at 20pc, to a maximum of €7,000 p.a. but it excludes the first €2,750 which is the equivalent of the Student Contribution. It is a way of offsetting the cost of private colleges.
Separately there are grants available through SUSI (studentfinance.ie) for both the Student Contribution (€2,750) and/or maintenance. These are both means tested and dependent on distance from college but the 'means' used are quite generous. For example, you can earn up to €64,700 in household income and potentially still qualify for something. The grant is a direct payment made to the college and/or student.
4. Elder Care
Very generous reliefs are in place for elder care. If you employ a carer at home or pay for private nursing home care, you can claim full tax relief at the top rate of the payer (not necessarily the patient), up to €75,000 p.a. You must claim it each year (it can't be backdated) and any hours provided by the HSE are deducted.
The most generous tax relief is reserved for pension contributions (levy swiping aside). It is available at the full marginal rate irrespective of the type of pension - occupational or personal. Deducted at source by employers, it must be applied for by the self-employed.
Example for top rate taxpayer: Contribution of €12,000 p.a. (€1,000 p.m.) will cost only €7,000 p.a. (€583 p.m.)
The fund in which you invest is largely tax free and you will get a tax-free lump sum on exiting at retirement age, although the pension itself is subject to income tax.