TAX CRED­ITS CHECK

Sunday Independent (Ireland) - Business & Appointments - - FRONT PAGE -

Now is a good time to check if you have got all the tax cred­its you were en­ti­tled to since 2014. Tax cred­its re­duce the amount of tax you pay so be sure to claim all the ones you’re en­ti­tled to.

“Peo­ple of­ten for­get that the home carer credit is avail­able — or they may not re­alise they’re en­ti­tled to it,” said Col­len­der. “You don’t need to be liv­ing with the per­son you’re look­ing af­ter to be able to claim the credit.”

The home carer tax credit, which is cur­rently worth €1,200 a year, can be claimed by mar­ried cou­ples or civil part­ners who care for one or more de­pen­dent peo­ple. (It can­not be claimed if the de­pen­dent per­son is your spouse or civil part­ner.)

Mar­ried cou­ples and civil part­ners how­ever should do their maths here — par­tic­u­larly if both spouses are earn­ing. “It may work out bet­ter tax­wise to forgo the home carer’s tax credit,” said Col­len­der. “You can­not claim both the home carer tax credit and the in­creased tax rate band. You should claim which­ever is more ben­e­fi­cial for the fam­ily.” (The in­creased tax rate band al­lows mar­ried cou­ples who are both work­ing to pay the stan­dard rate of in­come tax on up to €70,600 of in­come, rather than on up to €44,300 of in­come if only one spouse is work­ing).

You may be due a tax re­fund if you did not re­ceive the right tax cred­its in a given year — or if more of your in­come was taxed at the higher rate of in­come tax than should have been the case.

Al­ways check your tax cred­its and tax bands (the bands which de­ter­mine how much of your in­come is taxed at 20pc — and how much is taxed at 40pc) if there has been a change in your per­sonal cir­cum­stances in re­cent years.

“If you get a spe­cial so­cial wel­fare pay­ments in a given year, check back over your payslips and do a cal­cu­la­tion at the end of that year to see if you were prop­erly taxed or if you are due a re­fund,” said Col­len­der. “For ex­am­ple, if you go on ma­ter­nity leave, there is an ad­just­ment made to your tax cred­its and bands — it can hap­pen that the ad­just­ments made may not be cor­rect.”

Mar­ried cou­ples, who are jointly as­sessed for tax, should check how the tax cred­its and rate bands are split be­tween them — par­tic­u­larly if one spouse is self-em­ployed and the other spouse is a PAYE worker. “One spouse might be get­ting the full €44,300 of his or her in­come taxed at the 20pc rate — or the tax cred­its might not be di­vided equally among both spouses,” said Col­len­der. “This means one spouse might be car­ry­ing more of the tax bur­den for the cou­ple than they should. The per­son taxed through the PAYE sys­tem should have a look at their tax cred­its and rate band and see how they’ve been al­lo­cated.”

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