Advice

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Are you claiming the correct tax credits?

As reported in the Independent and various media outlets, over €4bn has been refunded by Revenue to taxpayers since 2010.

Tax Relief due on medical expenses, nursing home fees, etc have been claimed but this figure also includes overpayment of Income Tax. In our experience, taxpayers wrongly assume Revenue will inform them if they have overpaid in tax or their credits need to be amended but this is not the case.

Unless you request a P21 balancing statement from Revenue each year and ensure you are claiming the correct credits, you could be overpaying tax every year.

There are numerous tax reliefs available that taxpayers are not aware of and the Revenue have been called on to make people more aware of their entitlements. This is currently done in the UK through TV, Radio and Newspaper campaigns each year.

Only those who submit a claim with Revenue Commissioners will receive their portion of the overpaid taxes sitting on Revenue’s balance sheet. Once 4 years has passed this refund is no longer available. There is still a “fear factor” with Revenue where a lot of individuals are afraid to file a tax return in case they end up with a liability. This is very rarely the case, however if it does happen it is important that such an issue is addressed ASAP, as it could continue to occur going forward. And the aforementioned 4-year time limit, does not apply to Revenue.

“Sure I’m a PAYE worker, my tax is deducted at source”

This is a common response when we advise taxpayers of the importance in filing an annual tax return claim with Revenue. This is true, however over 80% of PAYE taxpayers overpay their taxes by on average €990 every year, and this is only of the people who actually do file returns.

There are usually 3 reasons why individuals overpay their taxes.

  1. Payroll Errors – yes, on the most part your tax is calculated correctly on payroll software. However, that software relies entirely on the information inputted by the payroll officer, who in turn relies on information from you, the Revenue Commissioners and the employer. With that much human input involved, you can see how human error could result in an over (or under) payment of Tax, USC or PRSI . It happens
  2. Incorrect Allocation of Allowances – whether you are a married couple or a single person with more than one source of income, you have certain rate bands and credits available to you with regards to Tax and USC. In order to ensure you do not overpay tax these allowances should be allocated according to the level of income between spouses and/or different sources of income, subject to Revenue limits. Where these allowances have not been reviewed regularly, more often than not they are allocated incorrectly, which is resulting in overpaid taxes.
  3. Claiming your Tax Credits – Revenue put the onus on the individual taxpayer to research, understand and ensure that they are claiming all their entitlements. Below are just some of the reasons why you might be missing out on tax refunds if you are not filing returns, there are many more:
  • Marital Status
  • Medical Expenses
  • Dependent Relatives
  • Tuition Fees
  • DIRT refunds
  • Age Credit
  • Home Renovation Incentive
  • Pension Contributions
  • Income Protection
  • Investment Incentives
  • Medical Insurance (BIK)
  • PRSI refunds once over 66
  • USC refunds for over 70’s

Contact us to request our Tax Return Application Form and we can review your taxes for the last 4 years

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Why you should file your Tax Return early

The 31st October Income Tax Return deadline….. is just that…. a deadline and not a target!

Your tax return can be filed at any time between 01st January – 31st October.

Here are 5 reasons why you should file your Tax Return early this year

1. Plan Ahead

If you file your return and are due to pay a liability, this is due by 31st October. Therefore, if your liability is calculated in advance, it gives you time to prepare and budget.

2. Less Stress

Submitting your paperwork to your accountant early means there is less pressure on both sides to complete and file your return on time. Giving your accountant more time to prepare and review your return.

If your paperwork is received late or too near the deadline, your accountant may not be able to guarantee filing it on time.

3. Avoid Surcharges

If your return is filed after the deadline of 31st October you will be subject to surcharges and interest owed. You also run a higher risk of being selected for an audit.

4. More efficient

The longer you leave your return nearer the deadline, the busier Revenue will be. If you are due a refund, the sooner you apply for this the better as you may need to wait a lot longer once we approach 31st October deadline due to the volumes of returns Revenue need to process.

5. Peace of mind

Being more organised and submitting your return early, gives you that peace of mind that you have completed your tax obligations and won’t have that rush in October.

Need to file your Income Tax Return and not sure where to start? Contact us now 01 539 7999
Why not read some of our previous blogs here

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Capital Gains Tax on rental properties

Interesting article issued in The Irish Times today regarding selling a rental property in negative equity.

A reader asks –

is there any capital gains tax due if mortgage was paid off and sold at a loss?

Let’s clarify, there is only Capital Gains Tax (CGT) due if there is a gain on the sale of property, which in this case would be zero. The gain is simply the sale price, less the cost price including other allowable expenses and reliefs. Any outstanding mortgage is irrelevant.

There will be no capital gains tax to pay and you will have a loss that can be offset this year against any gains you may make on the sale of other assets.

This loss can also be carried forward and offset against any future gains.

Regarding VAT, this area depends on a number of factors and each case needs to be reviewed in order to evaluate.

Read more on this article here

Have a query regarding this? Contact us today 01 539 7999
Why not read some of our previous blogs here

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