Consumer advice with Gráinne McGuinness
IF YOU earn income aside from your main job, have you checked the tax implications? More than twice the number of people who describe themselves as self-employed filed income tax returns to Revenue in 2017, highlighting the many financial situations which may lead to the need for a tax return. While the people who made returns despite not being self-employed know their obligations, tax specialists taxback.com suggest there may be others who are unaware that they need to file a return.
“The amount of people who fall into the self-assessed tax bracket goes far beyond those who simply work for themselves,” director Barry Flanagan said. “Landlords, Airbnb hosts, anyone who earns income from their non-PAYE employment, be it from investment properties abroad or from online trading — all of these people are legally required to file a tax return.”
So if you are earning non-PAYE income, from renting, a side job or investments, you need to check if a return is needed and file one if so. There are some incomes that you do not have to pay tax on, including scholarship income, interest from savings certificates, savings bonds, and national installment savings schemes with An Post, and payments to approved pension schemes.
Mr Flanagan believes Airbnb hosts, particularly those who only rent occasionally, are among those most likely to be out of line with Revenue.
“While Airbnb is growing in popularity in this country year on year, and the number of hosts continues to increase, anecdotal evidence leads us to believe that simply not enough people are declaring this income to Revenue quite probably because they don’t know they have to,” he said.
“Our concern is that this level of non-compliance will draw the attention of Revenue, as Airbnb report this income to Revenue annually, and unsuspecting and/or unknowing hosts will be hit with penalties and punishment as a result.”
The good news, whether your return is due to Airbnb income or another source, is that filing a return is relatively straightforward.
Revenue have a guide to completing pay and file tax returns on their site and www.citizensinformation.ie also have an explainer for PAYE workers or pensioners who have another source of income. But if you are completely new to the experience, Taxback.com is helpful and worth a visit. The company will do your tax return for you for a fee but also provide advice on how to do it yourself, available for free on their website.
It provides anyone who needs to file a return with a guide that will enable them to understand how the tax system works, and what their obligations are. Importantly, it also details what reliefs and credits are available, and how taxpayers can go about getting them. This is the upside of being pulled into the tax system. Yes, you may have to make a payment but there are also a range of ways to lessen the pain, depending on the individual circumstance.
To return to the Airbnb example, Taxback.com say the top five deductible expenses for hosts are electricity, broadband, gas, host fee, and cleaning fees. Other common allowables include mortgage interest, if the host owns the property, or rent paid, if the host sublets the property. Repairs and maintenance, services charges, insurance costs and any associated professional fees may also be used to reduce the amount owed.
Which form you will have to complete depends on the amount of your side income and how much you earn as a PAYE worker, is applicable.
If your taxable income is more than €5,000, or your gross non-PAYE income is over €30,000 a year, you first have to register as a self-assessed individual with Revenue and then need to file a Form 11 tax return and make a tax payment by October 31 each year for the previous year’s earnings. If your taxable income is less than €5,000 a year and your gross non-PAYE income is less than €30,000, Form 12 is the correct option to file. The guide goes through these forms in more detail and also the taxback.com guide deals with specific circumstances, including investing online, blogging, and foreign rental income.