Don’t be haunted by the tax deadline
Here’s how to avoid frights (and take an axe to your bill while you’re at it!)
Ghouls, vampires and skeletons aren’t the only thing scary about October 31. Halloween is also the looming deadline for filing a self-assessment tax return. And many people are going to get a fright as bills are likely to be higher than ever this year – while others, who don’t even know they are due to be haunted by ‘the taxman’, will be spooked even more!
Bloggers, shareholders, Airbnb hosts, cryptocurrency buffs, casual childminders and even waiting staff who get tips may all be swept into the tax net for any extra dosh they have earned.
Paying tax on tips sounds a bit harsh, but they are technically liable, says Taxback.com
‘Every cent we earn needs to be declared’
With days to go before the October 31 tax return deadline, ‘eight in 10 people (80%) are unaware that a tax return must be filed for any cash tips earned at work, while three in four (72%) don’t know that income earned from casual childminding must also be reported to Revenue’, the tax specialists say.
Taxback consumer tax manager Marian Ryan explains: ‘There is a common misconception that if income earned outside the PAYE net is small, there is no need to declare it. This is incorrect: every cent we earn needs to be declared to Revenue.
‘You are required to file a selfassessed tax return if you are self-employed, a contractor or subcontractor, a landlord, or if you receive any income in addition to PAYE income such as rental income, capital gains, and profits from investments or cryptocurrency.’
And of course, there are hundreds of thousands of self-employed people who will be anxiously aware of the October deadline already.
There are also plenty of ways to reduce your tax bill and ease the pain.
Here are some useful tips:
GET RELIEF
Almost half a million taxpayers overpay hundred of millions every year as valuable tax reliefs go abegging.
The biggest unclaimed relief is for medical expenses.
You can claim this for visiting the doctor, dentist, getting prescriptions and even for special foods or supplements if prescribed, eg. for
diabetics or coeliacs. Ms Ryan, inset right, said: ‘Foods bought due to a medical condition can be very expensive. Some gluten-free foods cost up to 75% more, according to a recent study by the Coeliac Society of Ireland.
‘The tax relief on such foods can be hugely valuable.’
The home-carer tax credit is another big-ticket tax relief that often goes unclaimed. This is for spouses who work in the home and it’s a hefty €1,700 per year. The third biggest, according to Taxback, is relief on tuition fees for approved third-level education courses.
There are lots more underused tax reliefs. See Revenue.ie for details.
GET YOUR RETURN IN EARLY
Filing your return late runs the risk of incurring interest and surcharges for every overdue day.
But even filing at the last minute is a bad idea. You may not be able to find receipts in a rush – and end up claiming for fewer expenses than you are due.
Or you might find you don’t have enough cash in hand to pay an overblown tax bill on time. We’re in a period of high inflation, which means higher incomes and bigger tax bills than usual.
If you’re registered for ROS, the pay-and-file deadline is extended until November 15 – but if you’re not you can avail of that extended deadline through a registered accountant.
In practice, most selfemployed people will be registered through ROS – or their accountants are.
USE AN EXPERT
You can file self-assessment returns yourself but it’s worth getting an accountant to do it for you.
The cost will run to a few hundred euro.
Taxback.com’s fee is €286 VAT-inclusive, which is cheaper than most in my experience. You can also write that fee off against tax, so you are saving yourself money – and a headache!
Even if you want to do it yourself, it’s handy to get an accountant to do it first for a year or two, and then you can see how it’s done and simply repeat the process… though you’ll have to keep an eye out for any tax changes.
MAKE THE MOST OF YOUR EXPENSES
Keeping receipts for any work-related expenses seems a nobrainer.
But newbies to self-assessment may not be aware of what exactly they can claim for. The biggest grey area is for expenses for both business and private use.
The Revenue Commissioners explain: ‘If you spend money on something that is for both business and private use, you can claim a deduction for part of the expense.
‘This would include items such as phone bills, motor expenses and rent.
‘You must work out how much of the expenditure was for busi ness purposes and claim a deduction for that amount only.’
So work out a realistic and conservative proportion of these expenses to put down for business use, bearing in mind you may have to stand over the breakdown in an audit when your records may be examined with a fine-tooth comb!