It all adds up: Get some tax relief from your money woes

Millions are paid back by Revenue in overpaid taxes every year. And with the economy in recession, now is as good a time as any to look at ways in which you too can claim tax relief. In the first of a two-day series, Niamh Hennessy — in association with the Irish Taxation Institute — examines the areas where you can claim tax relief, talks to the experts and takes you through the finer points of your pay slip.

* MEDICAL EXPENSES:

Relief can be claimed on certain doctor and consultant fees, dentist fees and drugs or medicines prescribed by a doctor.

Other areas where relief can be claimed includes treatment in an approved hospital or approved nursing home, transport by ambulance and reasonable travelling and accommodation expenses if qualifying health care is only available outside Ireland.

There are other areas too which can be sourced on www.revenue.ie.

Many families will pay the first €85 per month of their prescription drugs costs. The health service pays the remainder, anything which is not refunded can be claimed as a tax relief.

Tax relief can be claimed on medical expenses incurred by you for yourself or your qualifying dependants.

You cannot claim relief for any expenditure, which has been or will be reimbursed, for example the VHI. nHow to claim:

According to Revenue the best way to claim is by using the internet PAYE self-service for taxpayers.

For tax year 2007 onwards there is no longer any disallowance of the first €125 (or €250 for spouse and dependents).

* BIN CHARGES:

Anybody that pays service charges in full and on time or a son or daughter who pays the charges in full and on time and is living with an elderly parent on premises can claim relief on bin charges.

Service charges that qualify include money paid to local authorities for domestic water supply, domestic refuse collection and domestic sewage disposal.

The total tax relief that can be claimed for both fixed charge payments made (including lift charges and pay by weight) and bin tags purchased the previous year will be subject to an overall limit of €400. nHow to claim:

You can claim via the internet through the Paye self-service facility or by texting: ‘info credit bin’ to 51829 for instructions on how to claim relief in respect of fixed charges paid or text ‘info credit bin tags’ for instructions on how to claim relief on bin tags purchased. Or you can phone your Regional Revenue office or you can complete and submit the claim form: IT27 — Tax Relief for Service Charges on www.revenue.ie.

* TRADE UNION

SUBSCRIPTIONS:

If you are a member of a trade union and are paying a subscription fee you will be entitled to claim some tax relief.

An annual flat rate allowance of €300/2007, €350/2008 at the standard rate of tax 20% (tax credit €60/2007 and €70/2008) is due for trade union subscriptions paid in 2007 and 2008.

The full allowance is available annually regardless of the actual amount of the subscription paid. nHow to claim:

If you were or are a member of a trade union at any time last year and this year and you have not been granted relief for subscriptions made, you can phone your regional Revenue office.

* AGE CREDITS:

A person over the age of 65 can claim. The credit is doubled for married couples who have opted for joint assessment or separate assessment if either spouse is 65 at any time during the tax year. nHow to claim:

Claim relief for the current year online or by sending a text message using your mobile phone. Write to your local Revenue office to make a claim for previous years.

* TUITION FEES:

Tax relief at the standard rate of tax (20%) in the tax years 2007 and 2008 is available for certain tuition fees. The maximum limit on such qualifying fees for the academic years 2007/2008 and 2008/2009 is €5,000.

The tax relief is available in respect of tuition fees paid by an individual in respect of third-level education to an approved college in respect of an approved course and fees paid by an individual for certain training courses in foreign language and information technology.

The fees may be paid on an individual’s own behalf, or on behalf of a spouse, child or person for whom the individual is the legal guardian.

* How to claim:

For more information see Leaflet IT 31 — Tax Relief for Tuition Fees on www.revenue.ie

* RENT TAX CREDITS:

If you are paying for private rented accommodation such as a flat or house you can claim relief. You cannot, however, claim if you are paying rent to local authority tenancies.

Rent payable for premises outside the state is also allowable (No Territorial limit).

Rent relief can be claimed where a child is required to pay rent to their parents. The amounts paid, however, must be Rent as the term would normally be understood and not just a contribution towards the upkeep of the household. Since 2007 where the Rent Tax Credit is claimed by a child paying rent to their parents, the parents will not be allowed to claim the Rent a Room exemption. This is an exemption allowed to landlords who Rent a Room out of their Principal Private Residence and whose Gross Rental Income from this does not exceed €10,000 in 2008 (€7,620 in 2007). This means that the parent will need to declare their rental income on their annual Tax Return and pay any Income Tax arising.

* How to claim:

Form Rent 1 — Claim for Rent Relief on Private Rented Accommodation.

Written claim to include all details on Form Rent 1 or Relief may be claimed using PAYE online.

* MORTGAGE INTEREST

RELIEF:

TRS — Tax Relief at Source on Secured loans

Tax relief for home mortgage interest (secured loans) is not given through the tax system but is instead granted at source. Mortgage repayments are reduced by the amount of the tax credit due. For example, if the interest element of your mortgage repayment per month is say €500, your mortgage lender will reduce your monthly mortgage payment by €100 per month. This reduction is the same as giving tax relief at the standard rate of tax (20%).

Any future adjustments in your tax relief will be made automatically by your mortgage lender. It is not necessary to claim relief on your annual tax return or to contact your local Revenue office.

If, however, you are making mortgage repayments and not receiving Tax Relief at Source, you should contact TRS Section, Collector-General’s Division at LoCall 1890 46 36 26 who will arrange for the relief to come into effect.

* RENT A ROOM RELIEF:

Where a room (or rooms) in a person’s sole or main residence is (are) let as residential accommodation, gross annual rental income of up to €7,620 in 2007 and €10,000 in 2008 is exempt from tax. Relief in respect of mortgage interest relief is not affected. The relevant Capital Gains Tax/Stamp Duty provisions are also not affected. For more information see Leaflet IT 70 — A Revenue Guide to Rental Income.

* OTHER:

* Guide dog allowance:

An individual who is regarded as being blind at any time during the tax year and maintains a trained guide dog can claim.

* Widow/widower’s tax credit:

A widowed parent with one or more dependent children following the death of a spouse is entitled to relief.

* Loan interest relief:

Apart from interest on borrowings applied to acquire an interest in an employer company or partnership, relief is normally available only in respect of interest paid on a loan acquired and used for the purchase, repair or improvement of a sole or main residence.

* Seafarers credit:

A tax allowance of €6,350 is available for seafarers who are at sea on a voyage to or from a foreign port for at least 161 days in the tax year. It also applies to seafarers on vessels which service drilling rigs.