Everything you need to know before you file your income tax return with Revenue
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Despite the financial crunch many of us are feeling, every year, thousands overpay tax and miss out on claiming tax reliefs they are entitled to.
The average Irish tax refund is now €1,880, according to Taxback.com, so it's a significant amount of money.
Here’s a quick guide to keep by your side as you fill out your Tax Income for this year to ensure you don't under-claim.
First up, a quick explainer. When you’re claiming back tax, you usually either claim a tax credit or a tax allowance.
As Daragh Cassidy of bonkers.ie explains, “a tax credit works by reducing the amount of tax that you pay by the size of the tax credit. So a €500 tax credit would reduce your yearly tax liability by €500”.
A tax allowance, on the other hand, reduces the amount of income on which you pay tax. This usually results in you getting a refund on some of the tax that you've paid previously.
“The value of a tax allowance/tax relief will depend on two things,” Daragh explains.
“The top rate of tax that you pay and whether the relief is allowed at the higher rate of income tax that you pay or is restricted to the standard 20% rate”.
So, you if claim a tax allowance of €100 and you’re paying income tax at a rate of 20%, it will be worth €20. If you pay income tax at the higher rate of 40%, it will be worth €40.
So now, what can you, and should you, claim for 2022?
You can claim back 20% on most professional medical and health expenses that you’ve incurred over the past year including GP visits, consultant fees, maternity care, IVF, laser eye treatment, prescribed physiotherapy and counselling sessions. In the case of counselling or psychotherapy, the relief is available where the counsellor, psychologist or psychotherapist carrying out the treatment is a qualified practitioner, or where a patient is referred by a qualified practitioner for a diagnostic procedure.
‘Non-routine’ dental expenses including crowns, veneers, inlays, surgical extraction of wisdom teeth and braces are also covered. You can also claim for non-routine dental treatment performed outside of Ireland. To qualify for relief, the dentist must be a qualified dentistry practitioner under that country's laws and you must have the dentist complete a Form Med 2 for your claim.
If your health insurance has already covered some of the costs associated with medical expenses, you can’t apply for tax relief on the full cost of the treatments, but you can apply for relief on the balance.
- Other tax credits/allowances you may be entitled to in the Health category include reliefs for nursing home expenses, a guide dog allowance and blind person’s tax credit.
The rent tax credit will continue this year, with €500 available to be claimed for 2023. This has been increased to €750 for 2024, with jointly assessed married people or civil partners eligible for €1,500.
To claim this back you will be asked for your Residential Tenancies Board registration number and a number of other details about yourself and your landlord.
Parents who paid for children staying in rented accommodation can now avail of the rent credit too, and it can be backdated for this year and last year.
If you’re renting out a room or a number of rooms in your own home, you’re entitled to earn up to €14,000 tax-free. In order to qualify for this tax relief the room you’re renting out must be in your primary residence, it can’t be rented to family members and it doesn’t apply to short-term leases (such as Airbnb, B&B etc) or a self-contained unit which is beside your house, but not directly attached to it.
You can claim Owner-Occupier Relief if you spent money purchasing, constructing, converting or refurbishing a house or apartment which is part of a scheme in a qualifying area. You must live in and own the property.
The relief reduces your taxable income for ten years by 5% per year of qualifying expenditure, where you have spent money on a newly constructed property or 10% per year of qualifying expenditure, where you have spent money on refurbishing or converting a property.
New in Budget 2024, landlords can now claim tax relief at the 20% rate on a proportion of their rental income. For 2024, €3,000 of landlords’ rental income will now be taxed at the standard rate rather than the higher rate, resulting in a benefit of €600. This will increase to €4,000 in 2025, and €5,000 in 2026 and 2027, resulting in a €800 and €1,000 annual benefit.
You can claim tax relief on qualifying fees (including the student contribution) that you have paid for third level education courses. You can only claim the relief if you are the person who actually paid the fees – aka if you’re a parent paying your child’s fees, you can claim the relief, not them.
The maximum amount you can claim is €7,000 per course, per person, per academic year and each claim is subject to a single disregard amount of €3,000 or €1,500 each tax year. The first €3,000 is disregarded for a full-time student or €1,500 for a part-time student. If you have paid fees for more than one student, this amount will only be deducted from your claim once. A guide to calculating the relief is available on revenue’s website here.
- Other tax credits/allowances you may be entitled to in the ‘you and your family’ section include reliefs for dependent relatives, employing a carer, maintenance payments (these don’t include payments for the benefit of your children) and deeds of the covenant (a legally binding written agreement to pay an agreed amount to another person where you don’t receive any benefit in return for paying the amount).
With many of us now permanently working from home two, three, or more days per week, this is another tax relief many of us may be entitled to this year.
You can claim tax relief on up to 30% of your heating and electricity costs and up to 30% on your broadband costs - but these costs must be apportioned based on the number of days you have actually worked from home. That means, excluding weekends (104 days), public holidays (9 days) and your own holiday days… which will probably leave you somewhere around the 232 day mark.
To calculate your remote working relief, multiply your utility bills by the number of days you worked from home, divide this by 365, and then multiply by 30% for heating and lighting and 30% for broadband.
Because remote working relief falls under the tax allowance category instead of a tax credit, you won’t receive the figure back you calculated above - it will be 20% of 40% of that, depending on your tax band.
One of those lesser-known forms of tax allowances available is the flat rate expense allowance which can be claimed by a whole host of workers in Ireland.
There is a set amount allocated to each occupation and everyone can claim the same amount, regardless of how much they earn. For a full list of occupations entitled to the tax allowance (and how much it is) click here.
- Other reliefs you may be entitled to in the ‘your job’ category include reliefs for Personal Retirement Savings Account and Additional Voluntary Contributions.