Ireland is known for having very high personal tax rates and those employed as PAYE income earners may be paying as high as 57% in tax after USC and PSRI are accounted for. With rates having the potential to be so high, it’s prudent to understand what you may be eligible to claim so that you are not leaving money on the table for Revenue instead of yourself.
The 5 Most Common Claimable Expenses
- USC. If you’re the holder of a medical card and you have not reached the threshold of €60,000.00 over the financial year, then you are eligible only to pay a maximum of 4% and not the substantially higher amount of 7%.
What this means is that if you were not a medical card holder at the beginning of the tax year but became one later, than chances are that you have paid more USC than you were obliged to and should be entitled to receive a refund of the difference.
- Health Insurance. There are certain instances when there are tax reliefs available to offset the cost of health insurance. If your employer is paying for your health insurance, this is known as a benefit in kind and the tax relief is made available at the source.
This should all be done as a part of the PAYE process as you get paid. If you don’t have health insurance provided and paying for it privately, it may be worth talking to your employer about getting health insurance as a part of your salary package.
- Flat Rate Reliefs. There are quite a few scenarios where Revenue expects you to incur certain costs associated with being an employee and so they have made available flat rate expenses that can be claimed if you fit into one of the specific categories or occupations.
Plumbers who do their own welding, which can be quite a few of them as most gas plumbing jobs require brazing or silver soldering, can claim a flat rate tax relief of €205.00 per tax year.
Nurses who launder and supply their own uniforms and are not provided with these services by their employer, can claim a staggering €733.00 per tax year which is definitely a worthwhile expense to claim if it’s applicable.
These are not the only instances for which flat rate tax reliefs can be claimed and it is just one more reason why you should get your tax filed professionally to make sure you are getting as much back as possible.
Flat rates are one of the few claimable expenses which don’t require you to keep receipts if you fit into the qualifying category.
- Tuition Fees. If your institution is an approved course provider and you are studying an approved course, you may be entitled to very beneficial tax reliefs on your tuition and contribution fees, not including exam or administration fees.
Revenue does not let you claim the first €2,800.00, though, for many students who are studying at private colleges, their fees can easily reach much higher than this making it an avenue worth exploring when it comes to tax time.
- Medical Expenses. Non-routine medical expenses that have not already been reimbursed can often be claimed. These can include and are not limited to procedures such as root-canals, and crowns.
Certain overseas procedures may be claimable if the practitioner holds the relevant registrations in their country.
Why Can I Claim?
Though PAYE earners are not running their own business and generally have most of their costs covered by their employers, it’s reasonable to assume that there’s always going to be some costs incurred along the way that isn’t covered. Revenue understands this and have a list of certain flat-rate and varying expenses that can be claimed by the average employee.
The taxation system is designed with the knowledge in mind that most employers do not know exactly how many hours their employees will be working and how much time off they will have during the year. Because of this, tax is designed to be overcharged instead of undercharged, so that most people are not left with unaffordable tax bills at the end of the financial year.
What this means is that the majority of people pay more tax than what they owe, and so are more than likely entitled to a partial refund if they claim expenses appropriately.
How Far Back Can I Claim?
Revenue allows you to claim for as far back as the previous 4 financial years. It is recommended to seek the aid of an accountant or tax-back firm to make sure that you are claiming every expense and relief you are entitled to.
What Do I Need to be Able to Claim?
Receipts and lots of them.
It’s extremely important to keep receipts for every expense that you will be claiming as there will come a time when an expense will be queried by revenue or you are audited.
Audits are not the terrible experience that many people fear them to be, provided you have got the appropriate paperwork and records of your purchases. There are many apps available for keeping electronic copies of receipts and most accounting programs such as MYOB or Xero have inbuilt features for these. It is best practice to keep up to date with Revenue’s recommendations on which programs they accept for keeping receipts.
My P21 Says I’m Not Entitled
It’s important to note that Revenue only has basic data available on how much you have earned during the year. They will not automatically apply certain credits and tax reliefs that you may be eligible for.
It’s for this reason that it is probably in your best interests to seek out expert help when trying to prepare your tax paperwork as the difference could put thousands back in your pocket that you otherwise might not have been able to claim.
Whether you’re a high-income earner, a student or you fall somewhere in the middle, there is no sense in leaving money with Revenue when it could be going into your back pocket instead. We will be more than happy to discuss with you how we can achieve a bigger tax refund for you.