“Sure, I’m a PAYE worker, my tax is deducted at source”
This is a common response when we advise PAYE employees of the importance in filing an annual tax return with Revenue.
Remember, everybody has an obligation to pay tax, but none of us has an obligation to overpay, yet statistics will show you that over 80% of taxpayers overpay their taxes every year by about €900.
Only those who file an annual Tax Return and claim their entitlements with Revenue Commissioners will receive their portion of the overpaid taxes sitting on Revenue’s balance sheet. Once 4 years have passed this refund is no longer available and Revenue can use these funds as they wish. Therefore, 2014 is currently the oldest year you can submit a claim for and you have until the 31st December 2018 to do so.
There is still a ‘fear factor’ with Revenue where a lot of individuals are afraid to file a tax return with Revenue in case they end up with a liability. This is very rarely the case, however, if it does happen it is important that such an issue is addressed ASAP, as it could continue to occur going forward, and let me tell you the 4-year time limit mentioned above, does not apply to Revenue.
Below is a list of the Top 10 reasons for PAYE refunds!
1. Health Expenses
You can claim 20% relief on qualifying health expenses not already reimbursed by your health insurer. These are worldwide expenses and include, but not limited to expenses such as GP, Consultant, Hospital, Non-Routine Dental, Prescribed medicines or appliances and Nursing Home Fees.
2. Change in Personal Circumstances
If you have gone through a ‘life-changing’ event such as marriage, bereavement, having children, redundancy or change in salary, you should review that your allowances are allocated correctly between yourself and your spouse and that you are claiming everything you are entitled to.
3. Flat Rate Expenses
These expenses are agreed to amounts set by Revenue to cover employee costs to undertake your job. Receipts are not required and there are many professions entitled to claim these expenses which range from €40 to €2,476 per year at your higher rate of tax. The list covers many professions in the Health, Education, Construction, Service and Retail sectors also.
4. Pension/Income Protection
If you make contributions through your wages, you are receiving tax relief at source. However, if you pay through your bank or by way of a lump sum, you must claim tax the relief yourself, which is available at your higher rate of tax subject to certain limits.
5. 3rd Level College Fees
Qualifying courses attract tax relief at 20%. However, it is capped at a maximum of €7,000 and you must deduct the first €3,000 for a full-time course and €1,500 for a part-time course. This deduction is only per household, so if you are putting more than one person through college you get tax relief on the entire cost for the 2nd and subsequent person.
6. Home Renovation Incentive (HRI)
This relief is effectively a refund of the VAT incurred on repairs, renovations and improvements on your family home or rental property. The works must be carried out by a qualifying contractor and the relief is granted to you through your tax credits over a two-year period.
7. Caring for Relatives
If you are married and one spouse stays at home to look after your children or a relative over 65 years old, you may be entitled to claim up to €1,200 per year. Likewise, if you employ a qualified carer you may be entitled to tax relief on the salary paid to them.
8. Medical Insurance
If you pay your premiums directly to your insurer, you are receiving tax relief at source as your insurer only charges you 80% of the true cost, with Revenue paying the balance. However, if your employer pays it on your behalf and you are charged BIK, you must make a claim for the relief.
9. Payroll Errors
On the most part, your salary is calculated correctly on payroll software. However, that software relies entirely on the information inputted by the payroll officer, who in turn relies on information from the employee, the Revenue Commissioners and the employer. With that much human input involved, you can see how human error could result in an over (or under) payment of Tax, USC or PRSI. It happens!
10. Medical Card Holders
Holders of full Medical Cards are exempt from paying the 3rd rate of the USC, currently 4.5%. In most cases, your employer will adjust same. However, a large number of employees are not receiving this exemption.
The above are simply the 10 most popular means of tax refunds, many more are available. This information has been provided by our partner Damian Wilson of ITAS Accounting.
If you feel you may be due a PAYE refund and would like some assistance you can visit their PAYE Refund website www.ClaimMyTaxBack.ie
The above article has been written based on today’s rules and rates and does not constitute advice.