Savings can take a while. Don’t become disheartened, tax reliefs could be a way to increase your savings quicker.
If your savings are building slowly, don’t be tempted to spend €4 on a lottery ticket. Revenue might be able to help you supercharge your savings account. Reducing your personal tax liability isn’t just for rich people.
What are Tax Reliefs?
Tax reliefs directly reduce the income on which you pay tax. They may result in you receiving a refund of the tax you’ve already paid. The amount of relief you receive depends on the rate of tax you pay.
If you were paying tax at the higher rate of 40%, your income would be reduced by the relief amount. Then the balance is taxed at 40%. Otherwise it will be reduced by the relief, and the balance will be taxed at the standard rate of 20%.
Here’s an example:
In 2018, Celine had medical expenses of €1,630. She doesn’t have health insurance, but the HSE reimbursed her by €240. All of Celine’s medical expenses qualified for tax relief in this case.
|Recovered from insurer:||€0.00|
|Recovered from HSE:||-€240.00|
|Unreimbursed medical expenses:||€1,390.00|
|Tax deductible expenses:||€1,390.00|
Celine will be entitled to an income tax rebate of €1,390 x 20% = €278
What can I claim for?
There are several surprises on the list, which you can see here. Acupuncture, for example, would be an easy one to miss, and it’s quite a popular therapeutic treatment. The biggest surprise goes to something called Flat Rate Expenses.
Flat rate expenses:
Some professions have flat rate expenses associated with them. The list is here, so you can check if your job is there. Some of the occupations are quite surprising. Shop workers, for example, are entitled to claim €121 in flat rate expenses each year. When I worked in retail I was totally unaware, and with average retail wages, this could make a big difference. The €121 will be deducted from your taxable income, and your tax owed will be recalculated, so €121 x 20% over 4 years = €96.80 is your potential rebate.
You can also claim for your medical expenses over the past 4 years, and even if you’re missing receipts, these receipts can be easier to request from your GP’s office. Remember every time you choked at the cost of your medical letter for work? The cost of your prescription? All these receipts are potentially deductible.
Food as a Medical Expense:
Did you also know that if you are diagnosed as coeliac or diabetic, with dietary restrictions, the food you eat forms part of your medical care? With a doctors letter, you could be able to use your supermarket receipts to claim for the food you need to stay healthy. (This will only be applicable for diabetic and coeliac specific food items.) Special dietary needs can be expensive, make sure you’re not paying more than you need to.
How do I claim Tax Reliefs?
- Go to MyAccount on Revenue.ie
- Login using your details or register if you don’t have an account.
- Select ‘Review your tax 2015-2018’ (you’ll get access to the previous 4 years only)
- Choose the relevant year, and select submit for Form 12
- Choose ‘Add Tax Reliefs & Credits’
- Remember, if you’re jointly assessed with a spouse, you’ll need details for both of you, including P60s
- You’ll need receipts for reliefs related to expenses too
- Take your time, and make sure you have what you need in front of you
Is it worth it?
The average refund due can be €1,000. While it can be time-consuming to research your tax reliefs, it’s worth it in the end. As a nation, we under-claim. Specialist Tax Rebate services exist to help you, but they will either charge a fee, or charge based on a percentage of your rebate.
How to manage your taxes in the future:
- Know what you can claim, from the available reliefs
- Keep all your relevant receipts, using a receipt tracker, like RevApp from Revenue.
- View keeping your receipts as part of your monthly and yearly budgeting
- Don’t put yourself under pressure to understand ALL taxation, just YOUR taxation
- If you get overwhelmed, ask for help from a rebate service or accountant
- Remember, you will never regret gaining control over your finances.