Susan Edmunds.
Checking dates and finding the right forms can add up to a lot of money, writes
If you are an employee paying regular tax on your income, you might not even bother to file a tax return any more. Claiming the expenses you’ve paid over the year against your tax bill might be the type of thing you imagine only self-employed people do.
But there are still some tax credits available to PAYE-earning employees. Here is a guide to some of them, and how you can qualify:
Donations
You can claim back a third of the money you donated to charity over the year as a tax rebate, or a third of your taxable income, whichever is lower.
You will need receipts to show you donated $5 or more to an approved organisation – this could be a charity, overseas aid fund or your church.
Cilla Hegarty, of donations app Easy Giving, said many people were out of the habit of doing a tax return. Rebates on more than $1 billion of charitable donations are left unclaimed every year.
‘‘There’s a lack of awareness, or some people just can’t be bothered,’’ she said. ‘‘Or some people think they are claiming the money back from the charity but they are totally not. It’s not the charity that has to give the money back.’’
She said those who claimed back their donations tax credits could then donate their rebate again. ‘‘If every year you gave back what you got in donation tax credits it would make a significant difference.’’
If you’ve been making donations via payroll giving, the amount of tax you pay will have been adjusted on the spot, so you won’t qualify for an end-of-year credit.
You cannot claim a total amount that exceeds your taxable income for the year. That means if you are part of a couple and only one of you is working, it makes sense to make donations in the name of the person who is earning.
You can get a donation tax credit claim form from the Inland Revenue.
Some school and kindy payments
You can claim back a third of what you paid to your kids’ school or kindergarten association – provided it was given as a donation, and not as tuition fees or a payment for use of a specific resource or excursion.
Inland Revenue refunds tens of millions of dollars in rebates to parents for donations made to schools, every year.
If you have not been claiming each year, you can go back and claim up to four years in the past.
To claim, use the same form as for other charitable donations.
Independent earners
If you earn between $24,000 and $48,000 and are not on the right tax code, you may be able to claim a tax credit.
If you earn between $24,000 and $44,000 you should qualify for $10 per week, provided you do not get Working for Families or any other benefit. If you earn between $44,001 and $48,000 what you are entitled to drops by 13c for every dollar earned over $44,00.
Claim this tax credit by requesting a personal tax summary, or by giving your employer an updated tax code declaration with an ME or ME SL tax code.
Working for Families
If you have children and are working, you may qualify for Working for Families tax credits. This is often paid weekly or fortnightly but can also be claimed once per year. This is sometimes a good option for people who have variable income.
Depending on your circumstances, you might qualify for any of a number of credits, including the family tax credit, inwork tax credit, minimum family tax credit and parental tax credit.
The family tax credit starts at $92 for one child under 16, the inwork tax credit is $72.50 for families of between one and three children and an extra $15 per child for larger families.
A parental tax credit is available after the birth of a baby if you aren’t taking paid parental leave, and in rare cases a minimum family tax credit is available to bring the family’s net annual income to $23,764, if required.
But Working for Families has an ‘‘abatement rate’’, so that higher-income people get less. At the moment, 22.5c of credits are taken back for every $1 a household earned over $36,530.
If you aren’t sure what you might qualify for, it’s worth getting in touch with Inland Revenue to check. You can also use the calculator on workingforfamilies.govt.nz and apply online via the Inland Revenue site.
KiwiSaver member tax credit
If you contribute $1042 or more over the year to KiwiSaver, the Government will add $521 to your account.
You do not need to do anything to claim your credit – it will happen automatically.
But it is important to make sure the full $1042 was contributed over the year running from July 1 to June 30. If you need to top your account up to get the full credit, you can do so via a voluntary payment to your KiwiSaver provider.
What you can’t get any more
Some tax credits for PAYE earners have been shelved.
It used to be possible to claim tax back on childcare payments, but that was dropped in 2012, along with the ability to claim a housekeeper credit if you are disabled and not able to do housework.
The credit for income up to $9980 and the children’s exemption have also been dropped.
Young people can now avoid tax on up to $2340 of income, but only if it was earned from things that normally would not be taxed at source, such as babysitting or doing chores for neighbours. If they earn more than $2340, all their income is taxable.
Many people are out of the habit of doing a tax return. Rebates on more than $1 billion of charitable donations are left unclaimed every year.