How you can get tax relief
Brian's Budget may be brutal but here's 12 ways to beat the blues
The past few Budgets have meant that most of us lucky enough to still be in a job are paying more taxes.
Next Tuesday's Budget promises another round of income-tax hikes. And a raft of tax reliefs that Pay As You Earn (PAYE) workers can claim are also set to go in this Budget and the following three.
The four-year plan, known as the National Recovery Plan, that was unveiled last week, outlined a number of tax reliefs that face the chop.
But the good news is that you can still claim these reliefs and you may even find you are owed money by the taxman.
Tax practitioner Cathal Maxwell of paylesstax.ie advises: "A number of reliefs are being removed so people should act now to make sure they claim what they can."
Failure to claim all the tax reliefs and credits workers are entitled to means that thousands of us end up being effectively overcharged by the Revenue Commissioners every year.
What this means is that instead of cursing the next time you get a pay slip, you would be better served making sure you reduce your tax bill by claiming all the tax credits and reliefs you are entitled to.
Who knows, you may even be due a tax rebate.
But be warned. Because some of these tax reliefs are due to go soon you need to act quickly to make the best of the situation.
Here are a dozen ways to reduce your tax bill.
You can get back 20pc of the money you spent on health expenses in a tax year.
This means that if you spent €1,000 on medicines and doctors' fees last year, you could get €200 back from the Revenue Commissions.
This tax relief only applies to medical costs 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. Medical expenses going back four years can be submitted to the Revenue.
But if you are planning to claim for money spent on health in 2006, you have just weeks to get your claim into the tax office. This is because the claim must be submitted before the end of this year.
You will need to have kept your receipts. If you have lost these, your GP may be able to provide you with a copy of these.
If you are claiming for money spent on a GP, consultant or prescriptions in 2006, 2007 or 2008 and you are a higher-rate taxpayer, then your claim should be granted at 41pc.
In other words, if you spent €100 on medical matters in 2006, and this money was not reimbursed by a private health insurer, you can claim back €41.
But since 2009, the rate you can claim back dropped to 20pc.
Download a form called Med 1 from www.revenue.ie and act now to claim back medical expenses incurred in the last four years.
You do not need to submit receipts, but you do need to keep these. Fill out the form and send it to your local tax office.
One relief that is set to go in the Budget is the tax relief available to those who are members of a trade union and pay subscriptions.
Tax relief is available at the standard rate (20pc) on trade-union subscriptions up to €350, which means a tax credit of €70 a year for someone who pays this much.
A tax credit is the amount of money you can earn before you start to pay tax on it.
So a €70 tax credit means you can earn this much money, in addition to your other credits, before paying tax on it.
You can still claim as far back as 2006 if you submit your claim to your local tax office before the end of the year.
Another relief facing the chop, according to the four-year austerity plan, is tax relief for those who pay rent for their primary residence.
It is available if you are renting from a private landlord or a rental agency, but not if you are renting from your parent or from a housing authority.
The amount you can claim depends on your circumstances, but for single people under the age of 55 the rent relief tax credit for 2009 is €400.
For married people this is doubled to €800, as it is for single people over 55.
Again, this is a tax credit. Contact your local tax office.
Home carer's credit
The home carer's credit of €900 may be claimed by a married couple where the husband or wife works in the home caring 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.
For example, in the case of the home carer's credit, the first €900 of earnings a year is discarded before tax is applied.
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. There was no indication in the four-year plan that this credit was to go.
Income-tax relief is available for individuals who pay local authority and other service or bin 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 from the tax man at the end of the tax year. Well worth claiming.
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.
If a person minds up to three children in their own home, no tax is payable on these earnings up to €15,000.
Tax relief at the standard rate of tax (20pc) in the tax years 2009 and 2010 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.
For more information go online to www. revenue.ie.
Many workers are unaware that they are entitled to claim tax credits for expenses incurred in work. A tax credit reduces the actual amount of tax that must be paid.
There are a range of these work-related tax credits that PAYE workers can claim for certain expenses.
For example, teachers can claim up to €518 a year to cover expense incurred. A nurse can claim up to €733, while a carpenter can claim €220. Journalists can claim €381.
Income levy refund
Employees are exempt from income levy if their income does not exceed €15,028 a year, €20,000 if they are aged 65 or over (€40,000 for a married couple).
You may be entitled to a refund if you were out of work for a period of the past year or if you were paid irregular bonuses/commission.
Also exempt are full medical-card holders. If you held a medical card for any period during 2009, then you are entitled to a full refund.
It was up to your employer to refund any extra amounts paid at the end of last year. However, if you changed employer during the year, you can claim for a refund from the Revenue.
Certain income is exempt. For example, if you received a redundancy payment and paid the income levy, then you are entitled to a refund. See www.revenue.ie for more information.
Perhaps the biggest tax break available to the PAYE worker is the tax relief for investing in a pension.
At its simplest the tax relief on pensions means that if you pay tax at the 20pc rate then you can get 20pc off the money you put into your pension.
If you are taxed at the higher 41pc rate, then you get tax relief at this rate. This means that if you put €100 into a pension it will only cost you €59, because you get tax relief of 41pc multiplied by €100, which equals €59.
Employees will also get back the contribution to the health levy and their PRSI (pay-related social insurance) when they put money into their pension, up to certain limits.
However, employees will no longer be able to claim a tax relief on PRSI and health levy from next year.
And the tax reliefs that can be claimed by higher-rate taxpayers will fall from 41pc to 34pc in 2012, and eventually to 20pc.
But if you are making a payment into your pension this year you will still qualify for the full range of tax reliefs.