How to cut your tax bill
Tax burdens are ever growing, but there are some ways to reduce your payout, writes Charlie Weston
THOSE lucky enough to still be in a job have been hit with a range of tax rises in the past three budgets going back to October 2008.
The income levy has doubled and is imposed on income from just €15,028 up, while the health levy has doubled and PRSI (pay related social insurance) is now imposed on more income.
The income levy is the most savage of all the taxes as it is imposed from a low level of income, and pensioners with a pension of more than €20,000 (or €40,000 for a couple) cannot escape it.
All of this means that tax has become more of a burden for all of us. Tax rates at the margin (the last euro you earn) are now more than 50pc.
What all this means is that ways to lessen the burden are being examined and re-examined by smart consumers.
Director of taxation with Chartered Accountants Ireland, Brian Keegan said: "While the Minister didn't change the tax rates and bands in the last Budget, neither did he change the ordinary tax credits and reliefs available.
"There's still tax relief for some of the costs many of us incur. Every year Revenue repays around €500m in tax to PAYE taxpayers -- rent, medical expenses, service charges and flat rate expenses are the main categories for which Revenue may make refunds."
Here are some ways to reduce your tax bill.
You can get 20pc of the money you spent on health expenses last year and 20pc of your spending on medical expenses this year.
This 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.
If you are claiming medical expenses for 2008, and you are a higher rate taxpayer, your claim should be granted at 41pc.
This means that expenses last year of €400 will generate €80 in a cheque from the taxman.
Download a form called Med 1 from www.revenue.ie and act now to claim back medical expenses incurred last year.
Income tax relief is available for individuals who pay local authority and other service charges. Relief is given for service charges paid in full and on time in the previous calendar year.
The total that can be claimed for service charges is €400. This is given at the standard 20pc rate of tax. So if you paid €300 last year you will get €60.
Rent a room
Where a room in a person's main residence is let as residential accommodation, gross annual rental income of up to €10,000 in 2008 and 2009 is exempt from tax.
Where a person minds up to three children in their own home, no tax is payable on these earnings, up to €15,000.
Tax relief is available at the standard rate on trade-union subscriptions up to €350, which means a tax credit of €70 for someone who pays this much.
Home carer's credit
The home carer's credit of €900 may be claimed by a married couple where the husband or wife cares for one or more dependent children, and where they are jointly assessed.
A tax credit has the effect of reducing your payable tax by the amount of the credit.
If the home carer earns an income of less than €5,080 they can still claim the full credit. If they have income between €5,080 and €6,880, they can claim a reduced credit.
The tax credit is not available to married couples who are taxed as single persons.
Tax relief at the standard rate of tax (20pc) in the tax years 2008 and 2009 is available for certain tuition fees. The maximum limit on such qualifying fees for the academic years 2008/2009 and 2009/2010 is €5,000.
If you paid tax since January 1 last and are now unemployed, you may be entitled to a tax refund.
In order to receive this refund you should complete Form P50 from the Revenue Commissioners and send it to your local tax office together with your P45 (parts 2 and 3), which should have been given to you by your former employer, according to the 'TAB Guide to Money, Tax and Pensions'.
For more information go online to www. revenue.ie.