More than 300,000 of us overpaid our taxes
Figures From Overpay €700 And Revenue An Get Who Payout File A Then Average Of Those Return Show
No fewer than 317,054 people gave Revenue too much money in 2022. That’s a big jump on 2021, when almost 260,000 PAYE earners overpaid tax.
These facts came to light following a Dáil reply given to Labour’s Ged Nash by Finance Minister Michael McGrath late last year.
In addition, recent figures from Revenue show those who overpay and then file a return get an average payout of €700.
Marian Ryan, consumer tax manager with Taxback.com says if you’re serious about good financial management, then claiming back tax reliefs and refunds should be one of the first steps you take.
She points out each time your company pays you, your employer will apply both PAYE and USC tax deductions based on information from Revenue on your employee tax credit certificate.
If however, this information is not up to date, it could result in the incorrect allocation of tax bands and credits.
Moreover, there are a wide range of tax reliefs you don’t get automatically, but must take action to claim, whether or not you’re a PAYE worker.
The new rent tax credit is available for the tax years 2022 to 2025 and operates by reducing the amount of income tax you have to pay. To benefit from the tax credit, in other words, you have to have an income tax liability to offset against it.
Rent, Revenue is keen to point out, means the amount you pay for use of the property. It does not include additional sums which your landlord may also charge you for — things like utilities or laundry.
The maximum value of the rent tax credit is €1,000 per year for jointly assessed couples. The maximum value is €500 in all other cases, no matter how many properties you pay rent for during the year.
Subject to a number of conditions, the rent tax credit may be available for your principal private residence or a property your child rents to attend college.
Then there are medical expenses. The average Irish person takes between three and five trips to the GP every year, at an approximate cost of €60 per visit. You can claim tax relief on these costs at 20%, and a GP visit is not the only category of allowable expense.
Qualifying health expenses include consultants’ fees, maternity care, diagnostic procedures recommended by a practitioner, IVF, transport in an ambulance, acupuncture, non-routine dental care as well as psychology and psychotherapy treatment.
You can also claim relief for prescribed medicines and for a range of treatments including physiotherapy, chiropody and osteopathy. Special diet expenses for coeliacs and diabetics are also claimable.
In general, medical reliefs tend to be ignored by taxpayers — Taxback’s Taxpayer Sentiment Survey found 70% of us do not claim tax back on these expenses.
Nursing homes are, of course, very expensive, costing upwards of €1,000 per week. These fees are paid in a variety of ways, including through the Fair Deal scheme. Operated by the HSE, the scheme aims to provide financial support to people who need long-term nursing home care.
Under Fair Deal, you make a contribution towards the cost of the care and, if your accessed contribution is less than the amount of the fees, the HSE will pay the rest. While you can claim tax relief on the contribution you make, you cannot claim any relief on the contribution made by the HSE.
It can frequently happen, of course, that nursing home costs end up being borne by family members. Everyone who contributes is entitled to claim, and the refunds due can be significant.
Full payment of fees for a nursing home start at €50,000 a year at least, so even tax relief at the lower rate would entitle the payer to €10,000 in tax relief.
Many nursing home fees are paid by the children of the occupants, or are spread across siblings, some of whom could be paying tax at the higher rate and who would therefore be eligible for an even greater relief of up to €20,000 on fees of €50,000.
We also know that third-level tuition fee payers are missing out on very significant refunds. Tax relief is granted at the standard rate of tax, currently 20%, and there is a limit of €7,000 per course on which you can claim relief.
There is also a ‘disregard amount’, which stands at €3,000 for a full-time course and €1,500 for a part-time course. This figure is deducted from your total qualifying fees — but it’s only taken away once per year, no matter how many students you’re claiming for.
So which courses qualify? The vast majority of them, it seems. All courses in Ireland that are provided by publicly funded universities, colleges and institutes of higher education are approved for tax relief. Nor is the relief restricted to Ireland.
Courses provided by publicly funded or accredited universities and institutions in other EU member states are also approved, whether you’re studying at a distance or attending in person.
You can choose to claim relief on your tuition fee instalments either in the tax year the academic year began or in the tax year in which you paid the instalment. Note too, that while you can claim relief on the student contribution, there are some third-level fees for which you cannot claim. These include capitation fees, registration and admin fees.
If you’ve changed jobs during the year, or if your employment record is punctuated by periods of unemployment, there could well be tax reliefs due to you. Similarly, if you or your spouse has been made redundant during the tax year, you might not be getting the full benefit of the transferability of allowances. Take the time to sit down and review your affairs and make sure everything is in order and up to date.
Of course, the opposite case could also be true. You may not be paying all you should be paying. Revenue issues tax credits on the basis of the information they have. If that information has changed, it is quite possible Revenue might not have updated their records to reflect that.
Suppose, for example, you’re claiming the home carer’s credit, and then you return to employment. It may take Revenue some time to adjust your tax status to reflect that, which may result in a significant adjustment in your allowances within the tax year.
Save yourself a nasty shock and let them know in advance.