BEAT THE TAXMAN

10 TIPS TO CUT YOUR BILL

The average household is estimated to be missing out on around €950 in tax refunds. Tax experts say that many of us are still not claiming all the refunds and tax breaks available to us. With the tax deadline approaching for the self-employed and PAYE workers with non-PAYE income, now is the time to work out ways to optimise your earnings.

1 Filing deadline extended: Revenue has extended its pay-and-file deadline for online submissions from midnight on November 14 to midnight, November 16. This is to assist customers adversely affected by power outages during the recent Storm Ophelia. The deadline for paper returns remains October 31.

2 Nixers : Generally PAYE (pay as you earn) taxpayers do not have to file a tax return.

But if you have any income from non-PAYE sources where tax has not been paid, you will need to file and pay tax. If this income from non-PAYE sources exceeds €5,000, a Form 11 should be returned.

If your main income is through the PAYE system but you have additional earnings – such as interest on bank deposits, consultancy work, rental income – of less than €5,000, you need to file a return using a Form 12.

The self-employed must fill out Form 11 electronically.

3 Three steps to start: Accountants at Taxback.com have outlined three steps that self-assessed taxpayers should take to kick-start the pay-and-file process:

Consider all your sources of income. If you have income that was not subject to PAYE or DIRT, it is likely you’ll need to declare it via your tax return. You should contact Revenue to see whether you need to register as self-assessed.

Consider what deductions may be available. If you have rental income, are you claiming all your deductions for capital allowances and expenses?

Consider whether you can claim any other reliefs or credits, such as for medical expenses.

4 Earned income tax credit:

This tax credit was increased in last year’s Budget. Senior tax manager at Taxback.com Barry Flanagan says self-assessed taxpayers may be eligible to claim an earned income tax credit of €550.

If you also qualify for the employee tax credit (formerly known as the PAYE tax credit), the combined value of the credits can’t exceed €1,650.

5 Claim your reliefs: The three main reliefs have changed in the last few years, but can still be claimed.

For medical expenses, relief at 20pc is still available and can be claimed on most unreimbursed expenses incurred and on qualifying non-routine dental expenses. Relief may be claimed as a tax credit for unreimbursed medical

expenses incurred on your own behalf or for others.

Qualifying expenses include fees for doctors and consultants, prescription medicine, doctor-referred physiotherapy and routine maternity care.

Claim your tax return by submitting a Form MED 1 or by using Revenue’s web-based MyAccount service, which has replaced the PAYE Anytime service.

Many people don’t realise the home carer tax credit can be claimed where a mother or a father works in the home, caring for their own children.

It was worth €1,000 last year, but rises to €1,200 next year.

Itis available to any jointly assessed couple with one or more child, where the non-assessable spouse has income of less than €7,200 in 2016.

The tax credit for tuition fees

is still available. For 2016, the relief does not apply to the first €3,000 of qualifying fees paid. Similarly, for part-time courses, the first €1,500 is disregarded in respect of each claim.

6 Landlords: are entitled to write certain expenses off their tax bill for rental income. Some landlords believe they can write off the full cost of the mortgage repayments on the rented property. This is incorrect.

You can usually only write off 75pc of your mortgage interest against rental income earned in 2016. When filing 2017 returns next year, landlords will be able to write off 80pc of the interest. Landlords are only entitled to write off expenses that arose while the property was let.

7 Flat-rate expenses for employees:

Employees often don’t realise they are allowed flat-rate expenses if they work in a range of activities. Nurses, optometrists, panel beaters, grooms, musicians and air crew, to name just a few, may claim fixed expenses, provided certain conditions are met.

Go www.revenue.ie and search for ‘List of Flat-Rate Schedule E Expenses’.

8 Employing a home carer:

Relief is given by reducing your taxable income rather than by tax credit. Taxpayers must complete a Form HK 1 (available online).

For 2016, you can claim tax relief at the higher rate on the cost incurred up to a maximum deduction of €75,000. The carer can be employed directly or through an agency.

9 Annual inheritance tax

exemption: If you receive a gift during the year, capital acquisitions tax at a rate of 33pc is normally due on that gift. A €3,000 exemption is available for those who receive gifts, but not inheritances.

Each parent can gift up to €3,000 a year in cash to a child without any tax consequences – €6,000 in total.

10 Cycle to work: Tax relief is available under the scheme for the cost of a bicycle and safety equipment bought to use for cycling to work.

You can swap some of your salary over a year in exchange for your employer buying the bike on your behalf. The maximum cost qualifying for relief is €1,000.