TAX RATES AND TAX CREDITS

A SINGLE person can earn €33,800 at the 20 per cent rate band and then pass into the 40 per cent rate. The figures for a married couple with one income are €42,800 at 20 per cent and then 40 per cent. If both are earning, then they can earn €67,600 at 20 per cent and the balance is taxed at 40 per cent. A widow or widower with children has a 20 per cent rate band of €37,800 and balance is taxed at 40 per cent.

A single person tax credit is €1,650 as is the PAYE tax credit. It follows that most single people should have annual tax credits of €3,300 when the two credits are added together. If you do not have them then there is something wrong and you should call the tax office.

A married person is entitled to a tax credit of €3,300. If both spouses work then the total tax credit is still €3,300. If both are on PAYE they each get the PAYE credit of €1,650. Therefore if both are on PAYE, then their total credits normally should be €6,600.

A widowed person with children is entitled to a tax credit of €3,600 in the year after the spouse’s death. The tax credit falls over the following four years to €1,800 for the fifth year after the bereavement.

Persons aged over 65 are entitled to an Age Credit of €245 and where married the credit is a total of €490.

A single person with dependent children gets an additional tax credit of €1,650. Only one of the parents can qualify for it.

A self-employed person gets a new Earned Income Credit of €950 in 2017. If the person already has the PAYE tax credit due to employ- ment then they cannot also get the new Earned Income credit. One can claim whichever is best in the circumstances.

If one spouse stays at home to look after children, they can qualify for the Home Carer credit of €1,100 in 2017.

Where an elderly relative lives with the family, whose income is relatively low, then the Dependent Relative Credit of €70 can be claimed. It should be either abolished or increased to a realistic level.

Apart from the personal tax credits, the most widely claimed credits are for Health Expenses. Nursing home maintenance is allowed as a credit against tax paid at 40 per cent while other health expenses are allowed only at the 20 per cent rate. There is a fouryear claim period and if you miss that, then your claim is lost.

A tax credit is available for college fees paid, with the first €3,000 ignored for a fulltime course and the first €1,500 ignored for a parttime course. The ignored amounts refer to a family claim so that, if there are several family members at college, the ignored amounts are still €3,000 or €1,500 per annum.

The Home Renovation Incentive Scheme gives a tax credit equal to the amount of VAT suffered on repairs or improvements in one’s private house. The tax credit is given over two years, half in the year after the work is done and half in the next year. The maximum credit is €4,050 between the two years. One should ensure the contractor is registered for the scheme before commencing the work.