Couples can be assessed individually, jointly or separately, with the joint assessment option usually being the most favourable one
This is the last in our series of tax relief articles, and I will share with you some more areas that may be relevant to you.
The articles over the past couple of weeks have obviously struck a chord given the amount of emails I’ve received from readers, who weren’t 100% sure, or were aware of their entitlements.
And as I always say, it’s no good having this information if you don’t do anything with it, so the key to getting money back, is by following through and doing what you say you will do. Don’t delay any further and make that submission on those areas that apply to you and get back that money that’s rightfully yours.
One of the best ways you can prevent the Government from getting their hands on your income before you do, is by making pension contributions. Amounts contributed to a pension fund are taken from gross income before it becomes liable to tax. So not only are you reducing the amount of tax you pay, you are contributing to your future income in retirement as well.
The amount of tax relief available will depend on your age. For example, if you are aged 40, you can claim 25% of your income up to a maximum limit of €115,000.
The amount you contribute goes up in bands with reference to your age by an additional 5% each time.
If you are not taking advantage of this relief, you are leaving money behind you each year, so review your current funding rate and increase them and contribute as much as you can.
It’s that time of the year, when people are starting off or returning to third-level education. And if that person is you, or a child of yours, you are entitled to tax relief on the cost of qualifying fees i.e. tuition fees and the student contribution. No relief is available, however, for examination, registration or administration fees.
The relief is actually available to whoever is paying the fees and is available at 20% but is restricted to amounts over €3,000 and there is an upper limit of €7,000 per third level course. So, if qualifying costs amount to €5,500, you are entitled to tax relief on €2,500 which amounts to €500.
This relief also applies if you or your children are studying abroad, provided it’s in an EU member state, and in an approved course.
There are an estimated 45,000 people in Ireland who suffer from coeliac disease. As a result they have to purchase gluten-free food, which can be very expensive. If you suffer from this disease or if you have specific dietary requirements due to a medical condition, you can claim 20% tax relief on the cost incurred, which includes the cost of food purchased.
This cost over 12 months could be substantial, so it’s worth your while making a claim if you haven’t done so.
Tax Assessment Status
When it comes to how you wish to be assessed for tax, married couples or civil partners have three options to choose from. They can be assessed individually, jointly or separately, with the joint assessment option usually being the most favourable one. With it, tax credits and standard cut off points can be allocated between each other.
Married/Civil partnerships couples, who are both working can earn up to €69,100 and pay tax at the lower rate of 20%, with the balance taxed at 40%. If their individual incomes are greater than €34,550, they are taking advantage of the standard rate tax band, so, for there to be any monetary gain for a couple being assessed on a joint basis, one has to be taxed at the higher rate and the other at the lower rate. One has unused tax credits due to their low income, or only if one of them is working.
If for example, a couple has one income at its €50,000, they would be €3,450 better off each year opting for joint assessment than if the income earning spouse continued to be assessed on an individual basis.
Making a Claim
There are a couple of ways, you can go about making a claim for the tax reliefs I referred to over the past couple of weeks. You can do it online on the Revenue’s myAccount service or if you are unsure if you are doing the right thing, or don’t have the time, you can use a number of online tax advisory companies, who will make the submission on your behalf and take a percentage of the amount refunded.
And finally, remember there is a four-year time limit, so if you want to go back and claim for reliefs dating back to 2014, you have, to make a claim before December 31, 2018.
Liam Croke is MD of Harmonics Financial Ltd,
based in Plassey. He can be contacted at email@example.com or www.harmonics.ie