Tax credits and reliefs reduce the tax you pay on your income; they effectively mean more money in your pocket! It is important therefore to make sure you are claiming everything that you are entitled to.
If you are required to file personal income tax returns then you have the opportunity to review your position when completing your return. However if – like many PAYE workers – you have no requirement to file an income tax return, then you may well be missing out on valuable tax credit and relief entitlements.
If you identify credits or reliefs which you haven’t claimed then you can claim a refund, however you only have a limited time in which to do so.
31st December 2012 is the deadline for claiming refunds due for the 2008 tax year
Revenue imposes a four-year time limit for claiming a refund. This means that if you have under-claimed credits or reliefs for the 2008 tax year you must submit your claim to Revenue before 31 December 2012 or you will lose out. After this date you will only be entitled to claim any income tax refunds due in respect of 2009 onwards.
So what additional credits or reliefs might you have been entitled to?
The most commonly missed entitlements include medical expenses, bin charges, work related expenses, tuition fees, rent tax credits, home carers credits, one parent family credits and the incapacitated child credit. For example, someone entitled to the one parent family credit for the past 4 years but who has not claimed it could be due to a refund of up to €6,960.
You can claim tax relief on certain medical expenses incurred by you – whether these were spent on yourself or another person. Most medical expenses, with the exception of routine dental and eye care, qualify for relief. So, if you incurred €1,000 of qualifying medical expenses in 2008 you could be entitled to a refund of up to €410.
An individual paying rent for private rented accommodation may be entitled to a rent tax credit. The amount of credit depends on whether you are single or married and whether you are aged over or under 55. The amount of the rent credit for a single person under 55 in tax year 2012 is €240 (€400 in 2008) and for a married couple under 55 is €480 (€800 in 2008). These rates are doubled for the over 55s.
Home Carer Credit
A married couple or civil partnership may qualify for the home carer credit where one spouse/partner is in the home and cares for one or more dependent persons (for example his/her own children). In order to qualify, the couple must be jointly assessed and the home carer’s income must not exceed €5,080 for the tax year. The home carer credit for 2012 is €810 (in 2008 was €900).
One Parent Family Tax Credit
If you are widowed, single, divorced, deserted or separated, and have a dependent child resident with you overnight for all or part of the tax year, you may be entitled to the one parent family tax credit. In order to qualify you must not be entitled to the married person tax credit, nor can you be living with another person as husband and wife. The one parent tax credit for 2012 is €1,650 (in 2008 was €1,830).
Incapacitated Child Credit
This tax credit can be claimed by the parent/guardian of a child who is permanently incapacitated, either physically or mentally, from maintaining himself/herself. The incapacitated child credit for 2012 is €3,300 (for 2008 was €3,660).
Maternity Benefit for Public Sector Workers
Social welfare maternity benefit payment is not taxable. In many cases the benefit is paid to the employer who continues to pay salary at the full rate. However some public sector payrolls (we have come across this with teachers and HSE employees) tax maternity benefit at the same rate as normal pay. So if you are a public sector worker and have been on maternity leave at anytime since 2008, check your pay slips – you may have overpaid tax which you are entitled to claim back from the Revenue.
Tuition & College Fees
Tax relief at the standard rate of tax (20%) is available for certain tuition fees paid in respect of a number of approved courses at various approved colleges. The maximum limit on such qualifying fees for 2011 and 2012 is €7,000 (for years 2008 & 2009 the limit was €5,000). Please note that you cannot claim relief on registration fees.
The above list is not exhaustive. It is intended to give you a flavour of what tax credits and reliefs you may be entitled to. By reviewing your tax credit situation now you could well find yourself entitled to a tax refund. If you are a home owner, as well as reviewing your tax credits, you should also ensure that you have claimed mortgage interest relief.
Remember that if you do not review your tax situation before the end of December you will lose out on any refunds due to you for tax year 2008.
For a full list of the available tax credits & reliefs and details on how to claim them visit www.revenue.ie or contact McLaughlin McGonigle, St Helens, St Oran’s Road Buncrana, Co. Donegal. Tel +353 (0)74 9321420 / Fax +353 (0)74 9321421/or email: firstname.lastname@example.org
McLaughlin McGonigle t/a MLMG Financial Advisors is authorised to undertake investment business in Ireland by the Association of Chartered Certified Accountants