Up to 60% of Irish people don't claim tax relief on medical expenses. Be part of the 40%!
FOLLOWING on from last week’s article, as promised, I am continuing with the theme of getting money back from the tax man.
This week, I am going to focus on five more areas, all of which can put money back into your account, where it belongs.
According to one leading tax firm, 60% of people in Ireland do not claim tax relief on medical expenses that they are entitled to. Because of this, we are collectively leaving millions behind in tax refunds each year.
For expenses that are not covered by the state or your health insurance provider, you can claim tax relief at 20%, from their cost. For example, if the cost of going to your GP is €50, you can get a refund of €10 by making a claim.
You can claim this tax relief, as long, as you pay the bill, so it doesn’t just apply to costs incurred by you or your immediate family.
Regardless of whether the person is connected with you or not, it doesn’t matter, as long as you pay the bill you are entitled to the tax relief.
And there are a number, of qualifying medical expenses you can claim this relief for, some of which include: prescriptions, drugs and medicines, orthoptic treatment prescribed by a practitioner, ambulance transport, speech and language therapy for children, acupuncture, physiotherapy, and IVF.
If a couple are having IVF treatment and are paying for it themselves, the cost of each attempt could amount to €5,000. But, they can reduce that cost by €1,000, by making a claim.
Home carer’s allowance
This is one of those reliefs that thousands of couples miss out on, because they’re unaware of its existence or don’t know how to claim for it.
It’s available to stay-at-home parents who are looking after their own children or a dependent person.
The maximum annual relief available is €1,200, which is given to married couples or civil partners who are jointly assessed for tax.
The stay-at-home parent can still earn an income and qualify for this tax credit provided their income is €7,200 or less. They can earn up to €9,600 each year and still qualify for this credit, but the amount will reduce in size by one half of the difference between their income and €7,200.
This allowance is given by way of a tax credit, and is applied after your tax has been calculated, which has the effect of reducing the amount of tax you pay by the amount of the tax credit, so it has the same value for everyone.
Where an employer pays the health insurance premium on behalf of an employee and/or their dependents, a benefit-in-kind charge arises for the employee.
Because of this, the employee is still entitled to claim a health insurance tax credit. Because the tax relief applying to the premium is granted to the employer, and not at source for the employee, it’s necessary for them to make a claim directly themselves to Revenue. The tax relief available is worth a maximum of €200 per adult and €100 per child.
USC – Medical Card Holders
If you are in receipt of a medical card, and earn < €60,000 per year, you are eligible to pay USC at a maximum rate of 2%, and not the higher rate of 4.75%.
If you don’t notify Revenue, you will probably end up paying more than you need to throughout the year, so you need to speak with them, and once you do, they will issue a revised tax certificate to your employer, and any refund due will then come from your employer.
Where an individual takes out an income protection policy - that replaces a percentage of their income in the event they can’t work due to an accident or illness - they are entitled to tax relief on the monthly premium at their marginal rate of tax, up to an annual limit of 10% of their income.
If, for example a person is paying €60 per month which covers 60% of their income, they are entitled to tax relief of €24 on the cost of the premium.
Tax relief is not granted at source, so the individual has to make a claim themselves and they can apply on-line and include a contribution certificate which is given by the company who arranged the policy for them, as proof of how much they are paying. It’s my experience that a very high percentage of people do not make a claim for this tax relief, and again are paying more than they need to.
Next week, we will explore three more avenues to claiming tax back.
Liam Croke is MD of Harmonics Financial Ltd,
based in Plassey. He can be contacted at firstname.lastname@example.org or www.harmonics.ie