Thursday 19 October 2017

Households miss out on millions in 'free money' by failing to claim tax refunds

Picture posed. Thinkstock Images
Picture posed. Thinkstock Images

Charlie Weston Personal Finance Editor

HOUSEHOLDERS are missing out on millions in "free money" as thousands are neglecting to claim tax refunds, the Irish Independent has learned.

Less than one in 20 taxpayers claimed money back on medical expenses last year, according to figures obtained from Revenue.

Income taxpayers are entitled to get back 20pc of any money spent on health expenses in a tax year.

This means that if a family spends €1,000 on medicines and doctors it can can get €200 back from the Revenue Commissioners.

This tax relief only applies to medical expenses that have not been reimbursed by a private health insurer. Medical expenses include GP costs, drugs and medicines, hearing aids, home nursing and maternity care, among some others.

But figures obtained by this newspaper show that out of a total of 2.17 million PAYE and self-employed taxpayers, fewer than 200,000 claimed a tax refund for money spent on health expenses in 2011.

And last year the figure was even lower, with just 111,700 taxpayers making a claim for medical costs, including nursing home expenses.

Even smaller numbers of taxpayers are claiming a tax credit for those working in the home caring for dependant children.

The home carer's credit of €810 may be claimed by a married couple where the husband or wife works in the home caring for one or more dependant children, and where they are jointly assessed.

A tax credit has the effect of reducing your payable tax by the amount of the credit.

It was expected that there would be large numbers claiming this credit due to job losses.

But the Revenue figures show that just 102,000 claimed the credit last year, and similar numbers in 2011.

Chairman of the Consumers Association Michael Kilcoyne claimed the Revenue and the Government were not doing enough to encourage people to claim tax refunds and credits.

"If the same efficiency was applied to this as was applied to the property tax then a lot more people would be getting tax refunds," he said.

Mr Kilcoyne said the authorities were more concerned about getting people to pay new taxes than helping them claim back what they are owed. This meant people were effectively missing out on free money, he said.

Director of taxation at Chartered Accountants Ireland Brian Keegan said there had been a clear fall-off in the numbers getting tax relief for medical expenses. "In the past Revenue was quite proactive in promoting the claiming of allowances and reliefs."

He said the percentage of medical costs that can be claimed fell from 41pc to 20pc, and combined with people's fear of dealing with Revenue, this may be putting people off making a claim.

A spokeswoman for Revenue insisted that it devotes time and resources to encouraging taxpayers to claim refunds.

Refunds can be claimed online, by mobile phone and by submitting forms, she said.

Irish Independent

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