Pointers to getting the most from tax reliefs

Pointers to getting the most from tax reliefs

On or around December 9 almost all employees can expect to receive a letter from Revenue.

The letter will set out what your tax credits and reliefs will be for the year 2020.

There were almost no changes to the tax regime in October’s budget for Paye workers.

However, there remains a risk that a review by Revenue of the so-called flat-rate expenses regime, whereby certain categories of workers were automatically granted allowances towards the cost of their employment, will affect many wage packets.

In evidence to the Public Accounts Committee, Revenue chairman Niall Cody signalled that this might not happen immediately.

That really would be a case of no news being good news.

Allied to these letters is a Revenue campaign to encourage taxpayers to ensure they have claimed whatever allowances and reliefs they may be entitled to.

Sometimes people don’t want to go to the bother of making a claim or are fearful of the paperwork.

Other times, it just might not seem obvious that tax relief was due.

Here’s a few pointers to get the benefit of some of the more important tax breaks.

For medical and dental expenses, relief may be claimed for medical expenses paid by you for yourself or for others.

Expenses qualifying for the relief include doctors’ visits, consultants’ fees, and prescription medicine.

Some expenses incurred abroad, including certain travel costs can also qualify for the relief.

The tax credit is 20% of the amount of medical expenses incurred which have not been reimbursed, which means you can’t include amounts refunded by an insurer in your claim.

Tax relief is also available for the cost of some non-routine dental treatments, for example, crowns, veneers, and orthodontics. Routine check-ups and fillings, unfortunately, don’t qualify.

If you’re funding someone going to college, you may be able to claim tax relief at 20% for tuition fees paid in respect of third-level colleges, as long as the fees are fully paid.

The maximum amount is set at €7,000 for tuition fees that tax relief can be calculated per annum per student.

The relief applies to tuition only.

It isn’t available if part of the tuition is funded by a grant, scholarship or by an employer. If fees are paid in installments tax relief can still be claimed once paid.

Each claim (not each course) is subject to an annual “disregard amount” of up to €3,000.

If you have paid fees for more than one student, you only subtract the disregard amount once from your annual claim.

There’s also tax relief for fees paid for Revenue-approved foreign language and information technology courses and providers.

The list is on their website.

Pensions remain one of the most tax-efficient investments you can make and premiums paid by an employee to a Revenue-approved pension scheme are allowed as an income tax deduction subject to some restrictions.

For nursing home costs, you can claim tax relief at your highest rate of income tax, or 40%, if you paid nursing home charges, to a home that provides 24-hour nursing care on-site, for yourself or on behalf of somebody else during the year.

And finally remember there’s a time limit of four years. Eligible spending during 2015 must be claimed before December 31, otherwise, the tax relief is lost forever.

Also, it’s necessary to keep evidence — policy documents, receipts and the like, in case Revenue ever needs to verify your claim.

Brian Keegan is director of public policy at Chartered Accountants Ireland

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