Tax reliefs could be worth thousands a year to workers, but many forget to claim them, or don’t realise they can.
Time is running out for workers to claim a valuable tax refund they may be entitled to. There is a four-year limit on how far back you can claim tax refunds – and so this New Year’s Eve marks the last day that you can claim any tax relief you’re entitled to for 2014.
Tax reliefs could put hundreds, perhaps thousands, back into your pocket – so it’s important to claim them.
Even if you don’t believe you’re due a tax refund for 2014, it’s worth reviewing your expenses and tax credits for 2014 and subsequent years as you could be entitled to tax back. People often overlook, and forget to claim, tax reliefs – and in doing so, lose out on their chance for a tax windfall.
Medical bills relief
One tax break which people often forget to claim, or fail to claim in full, is the tax relief on medical expenses, according to Norah Collender, tax technical manager at Chartered Accountants Ireland. Under that tax break, you can claim back a fifth of the cost of certain medical bills in tax relief.
Many of us already know that you can get tax relief on the cost of a visit to a doctor or consultant – as well as for any drugs or medication which they supply or prescribe. The range of health expenses which you can claim tax relief on however is quite broad – so you may have paid out for an expense which you don’t expect to be eligible for the relief, but which actually is. For example, you can get tax relief on the cost of exercise bikes, wheelchairs and wheelchair lifts, and wigs – as long as these items are medically necessary and used on the advice of a practitioner. You can get tax relief on IVF, acupuncture or treatment from a psychologist or psychotherapist – as long as certain conditions are met.
“One expense which people might forget to claim tax relief on is the cost of special dietary food,” said Collender. “If you have a medical condition which requires you to be on a special diet, such as if you are coeliac, you can claim tax relief on that. Also, a lot of children are experiencing learning difficulties. The cost of a child’s educational psychologist or speech and language therapist qualifies for tax relief – as long as the practitioner is registered.”
Should you be a kidney patient or have a child who requires ongoing medical attention, check that you are getting all the tax relief that you entitled to. Parents for example may be entitled to tax relief on the cost of their own overnight accommodation – if that overnight stay was necessary for their child’s hospital treatment. Parents may also be entitled to tax relief for the cost of transporting their child to and from hospital, and for their own transport costs when visiting their child.
Even if your private health insurer covers a certain amount of your medical bills, you may still be entitled to claim tax relief on expenses which you haven’t been reimbursed for.
“Private health insurance often doesn’t cover the cost of prescriptions,” said Collender. “There’s also typically a lot of caps on the expenses which a medical insurer will cover. So remember to keep a record of any medical expenses which your medical insurer doesn’t reimburse you for – and to make a claim for those un-reimbursed expenses.”
As well as claiming tax relief on medical expenses incurred in 2014 by the end of this year, you can also claim relief for 2015, 2016 and 2017. However, you must wait until 2018 has ended before you claim tax relief on medical expenses incurred in 2018.
Flat-rate expenses
Next year could be the last year that you will be entitled to claim flat-rate employment expenses for. These flat-rate expenses, which are essentially tax relief you can get to cover the cost of expenses incurred when carrying out your work, could be worth a few hundred – and some cases, a few grand – to you a year.
A number of flat-rate expenses are however set for the chopping board from January 2020, including those for shop assistants, journalists in employment, and cardiac technicians. This is due to an ongoing review by the Revenue Commissioners into expense-related tax reliefs. This review will be completed by the end of 2019 – with January 1, 2020 set to be the date for any changes introduced under this review to kick in. More than 80,000 employees are expected to lose out as a result of this review.
“Now is a good opportunity for people to consider if they qualify for flat-rate expenses – and to make a claim for flat-rate expenses they’re entitled to for the last four years,” said Collender. “People who are new to a profession should find out any flat rate expenses they’re entitled to as they may not be aware these are available.”
Remember, should you lose your flat-rate expense allowance from 2020, you can still claim back the cost of any work-related expenses – but you will need to make this claim yourself, and provide receipts when doing so.
Tax credits check
Now is a good time to check if you have got all the tax credits you were entitled to since 2014. Tax credits reduce the amount of tax you pay so be sure to claim all the ones you’re entitled to.
“People often forget that the home carer credit is available – or they may not realise they’re entitled to it,” said Collender. “You don’t need to be living with the person you’re looking after to be able to claim the credit.”
The home carer tax credit, which is currently worth €1,200 a year, can be claimed by married couples or civil partners who care for one or more dependent people. (It cannot be claimed if the dependent person is your spouse or civil partner.)
Married couples and civil partners however should do their maths here – particularly if both spouses are earning. “It may work out better tax-wise to forgo the home carer’s tax credit,” said Collender. “You cannot claim both the home carer tax credit and the increased tax rate band. You should claim whichever is more beneficial for the family.” (The increased tax rate band allows married couples who are both working to pay the standard rate of income tax on up to €70,600 of income, rather than on up to €44,300 of income if only one spouse is working).
You may be due a tax refund if you did not receive the right tax credits in a given year – or if more of your income was taxed at the higher rate of income tax than should have been the case.
Always check your tax credits and tax bands (the bands which determine how much of your income is taxed at 20pc – and how much is taxed at 40pc) if there has been a change in your personal circumstances in recent years.
“If you get a special social welfare payments in a given year, check back over your payslips and do a calculation at the end of that year to see if you were properly taxed or if you are due a refund,” said Collender. “For example, if you go on maternity leave, there is an adjustment made to your tax credits and bands – it can happen that the adjustments made may not be correct.”
Married couples, who are jointly assessed for tax, should check how the tax credits and rate bands are split between them – particularly if one spouse is self-employed and the other spouse is a PAYE worker. “One spouse might be getting the full €44,300 of his or her income taxed at the 20pc rate – or the tax credits might not be divided equally among both spouses,” said Collender. “This means one spouse might be carrying more of the tax burden for the couple than they should. The person taxed through the PAYE system should have a look at their tax credits and rate band and see how they’ve been allocated.”
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