Jill Kerby
You have one month or, one month and 13 days if you have a computer, access to the internet and can follow some pretty simple on-line instructions.
I’m referring, of course, to the annual deadline that hundreds of thousands of people come to dread every year: the Self Assessment File & Pay tax deadline and it applies to the self-employed and sole traders; people in receipt of foreign income, like a pension, rental income and of course, PAYE earners who have separate income from a source other than their employed job.
The file and pay deadline, as always, is Halloween, October 31st, or, it you file on-line at the Revenue’s website, www.ros.ie, November 13.
This ‘self-service’ website, as the Revenue describe it, has been tweaked and streamlined over the years making it quite user-friendly, and if you are willing to read the step-by-step instructions carefully, a lot easier to follow than you might imagine.
Ideally, novices might ask a friend or acquaintance who successfully files on-line to sit with you as you register your new Revenue account. It will take a few days to process your registration, so it needs to be done sooner than later so that you can then proceed to fill in your eForm12 tax return and pay whatever tax you might owe.
Some people find the discipline of a single file and pay date very difficult (there is an option to spread your tax payments over 12 months, but carries an extra charge) because you need to religiously feed a bank account marked “taxman” in order to have enough money to meet your tax liability.
Still, in North America where the self-employed must file their taxes quarterly, often say they are deluged with time-consuming paper-work and/or higher accountancy costs.
Meanwhile, my colleague and co-author of the annual TAB Guide to Money Pensions & Tax, tax adviser Sandra Gannon, says that at least half of all her new clients – even PAYE ones – will have a tax refund coming to them, typically €500 to €800 because they haven’t claimed all their tax credits from the previous four years.
The four years, as they apply for this file and pay deadline are 2011, 2012, 2013 and 2014, so it is also in their interest to File & Pay…and claim their refunds.
So what sort of tax refunds might you expect if you also happen to fall into the category of person who now needs to make an annual tax return?
First, it should be said that many tax refunds, most of which are at the standard, 20% income tax rate, have been scaled back in recent years, as in the case of the €1,000 spending cap for health insurance premiums.
Some tax reliefs have been abolished – for trade union fees (in 2010) and bin charges (from 2012) for example, so you will only be able to only claim the latter for 2011 out of the current four year refund cycle.
These are small amounts at stake, but outside of the usual self-employed business expenses, including a proportion of your rent, lights, heat, insurance if you work from home – the most significant tax refunds are for private pension plan contributions or AVC top-ups (Additional Voluntary Contributions), private health insurance premiums, medical and dental expenses, rental tax relief if you are a tenant, income tax relief on expenses if you are landlord, certain third level education fees and nursing home and the €810 annual home carer’s credit.
Some tax credits are applied at source – such as scaled mortgage interest relief (which will be gone in 2017 for everyone) and private health insurance. In the latter case if your employer pays the insurance, you must claim the tax relief directly.
Medical and dental tax credits are refunded only for approved treatments and conditions, medical appliances (like a walker or wheelchair) or certain prescribed foods for diabetics or coeliacs, for example. This applies to qualifying treatments taken abroad.
Rental tax relief is also being phased out and can no longer be claimed by anyone who started renting their home after December 8th, 2010.
Third level fee tax refunds apply on for named institutions and courses and apply strictly to fees, not registration charges, and the amount that can be claimed against is reducing every year and is also capped.
Most tax refunds are for the standard rate of income tax – 20% – but two remain at 40% – pension fund contributions/related protection policies and for nursing home and home nursing/care expenses.
The clock is ticking. To stay within the tax deadline and avoid late penalties and surcharges, go on-line now and complete an accurate return. Or hire a tax adviser to do it for you.
The tax-man, though maybe not publicly…will thank you for it.
If you have a personal finance question for Jill, please email her at jill@jillkerby.ie or write to Jill Kerby, The Munster Express, 37, The Quay, Waterford X91 DC 83. Copies of Jill’s Talking Money Guide, sponsored by Irish Life, can be downloaded at www.irishlife.ie or request a signed, hard copy via her email address
