The tax perks that could make us all richer in 2017
We’re throwing away millions in tax perks each year. The experts explain what they are…
The €1,100-a-year homecarer tax credit for fami liesi sone of the millions wethrow awayevery year by not claiming ourtaxcredits.But whatelseare we missing out on? We askedtheexperts to list the most neglectedtaxperks.
Around280, 000taxpayers are entitledtohomecarer’staxcredit –butthemajorityof these don’t even know itexists,ordon’tbothertoclaim it,accor ding toexpertstaxback.com
Some80,900whodid cl aimin2014got€752each–oral mo st€61mi ntotal.
‘Ouranecdotaldatasuggeststhatthiscreditisatbestmisunderstoodandfrequentlyunknown,’saidBarryFlanagan,seniortaxmanagerwithtaxback.com
A recent survey by his firm suggestedthat nearly two thirds o ftaxpayers weren’t aware of the credit.Ands o around €120m may have ‘gone a begging’ in unclaimed homecarertaxcredits in2014 alone.
The home carer’s credit wasincreasedto €1,100 this year from€1,000l ast year–whichputs a lotmoreat stake now. Surprisingly,thenumbers claiming the credit–and the amountclaimed–is falling each year.
In 2012, 84,400 people claimed€63.2m, whichdropped to 82, 500who got back €62 min2013, beforenumbersfell again in 2014.
Aspokeswoman for the RevenueCommissioner insist edith add one its best to highlight this valuablecredit: ‘Revenue has, for a number ofyears, taken step sto automatically allow thehomecarer credit without the person having to makea claim, wherever possible.
For example, we use datareceived from the Departmentof Social Protection in relation to child benefit, together withother data from Revenue’s ownrecords, to automatically grant
the credit. Revenue also pre-populates the annual tax returns of self-assessed taxpayers with the home carer credit, where it was claimed in the previous year.’
The Revenue publishes extensive information on tax reliefs and credits on its website revenue.ie and undertakes targeted advertising to encourage customers to claim all their entitlements.
‘We sent letters to more than 137,000 PAYE customers to remind them that there is a four-year time limit for claiming additional tax credits and reliefs – therefore, claims in respect of 2012 must be received by December 31, 2016,’ the spokeswoman added.
The amount of the tax credit translates directly into the amount of real money it puts in your pocket. So this year’s €1,100 credit reduces your tax bill by just that – €1,100.
A home carer tax credit may be claimed by a married couple where one spouse cares for a dependent person such as child, elderly person or someone with a disability.
It may not suit every family as you can’t claim both the home carer tax credit and the increased standard rate band for dual income couples (see Questions & Answers). But at least if you know it exists, you can work out which is best for you. The credit was initially known as the ‘home carer tax allowance’ and was in place since the 2000/2001 tax year.
It was available to anyone who cared for a dependent – which includes a child for whom child benefit is payable.
During the post-budget debate on the new childcare measures, many stay-at-home parents who complained of missing out on lucrative childcare benefits were unaware that they also had a valuable tax break – which was increased in Budget 2017.
This is just one example of the tax breaks we don’t bother to claim, costing us thousands every year. So what are the other most neglected ones? We asked the experts.
BARRY FLANAGAN, TAXBACK.COM
Taxback.com reckons that, after home carer’s credit, the most neglected tax relief concerns medical expenses.
‘Refunds we have processed range from the hundreds to the thousands, with the average coming in at somewhere around €880 for first-time claimants,’ said Mr Flanagan.
‘That’s a good chunk of change by anyone’s standards – and given that it usually takes people under an hour to cobble together the necessary receipts and fill out the relevant documentation – it’s probably the easiest money you’ll ever make!’
For medical expenses, relief at 20% can be claimed on most unreimbursed healthcare bills and on qualifying non-routine dental expenses.
The tax credit for tuition fees is another under-appreciated tax break.
‘The relief generally 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,’ Mr Flanagan said.
‘As the student contribution falls under the definition of “tuition fees” it means any family with more than one child in college at the same time, will usually qualify for a tax refund.’
RED OAK TAX REFUNDS.IE
Red Oak is so confident of getting tax back for clients that it won’t charge a fee if there is no refund.
It lists failing to claim medical expenses and basic entitlements to credits and allowances for being married, having children and job-related expenses as the most neglected tax perks.
‘Did you know that if you have a medical card, you don’t have to pay the top rate of USC,’ Red Oak points out.
It also points to flat-rate jobrelated expenses that can be claimed by those on PAYE – but often aren’t.
The Revenue allows many jobs an annual allowance but you have to claim it to get it.
Doctor, teacher, mechanic engineer, labourer, panel beater, waiter, barman… these are just a few of the people that may be due extra refunds (for professional expenses) according to Red Oak.
It also asserts that getting married can save you €4,000 in tax – and pre-2010 renters can claim if they haven’t already.
JOHN LOWE, AUTHOR OF THE MONEY DOCTOR
‘John Lowe is not surprised that so many neglect the home carer tax credit: ‘It’s apathy really, especially with PAYE workers [who don’t have to file returns]. Life is busy and finance is the last thing people want to think about.’
He pointed to other often-neglected reliefs as being medical expenses relief and Additional Voluntary Contributions to pensions. AVCs can save you thousands in tax as they are written off against tax at the higher rate.
Yet incredibly, many people spend thousands on AVCs whose main advantage is this enormous tax saving – yet they then don’t bother to send in the form to Revenue!
‘That can happen quite a lot,’ he said. They still get a second chance to claim back for unclaimed reliefs and credits – but only for four years.
CATHAL MAXWELL, OF PAYLESSTAX.IE
‘Definitely the most common overlooked tax claim is for medical expenses,’ says Cathal Maxwell. ‘Another one would be for married couples on separate tax assessments who might be due a tax refund if they were taxed on a joint basis.’
‘I had one recently where the tax refunds came to over €4,000 because one spouse was not fully using their 20% tax band.’