How to check if you are paying too much tax - 2006 tax rates

Brendan Burgess

Founder
Messages
37,936
This is an update and expansion of an earlier thread by ClubMan. Please post questions or corrections. I have to get the balance right between a checklist and a comprehensive guide, so I am including only the main limitations and qualifiying criteria.

Check the Revenue site for more detail

Each relief has a leaflet which you can find here

To claim any of these reliefs, you do not need to make an annual return. Contact the Revenue or register on line with www.reachservices.ie

Are you getting the right personal tax credit?
Single Person: €1,630 (2006), €1,760 (2007)
Married Person: €3,260 (2006), €3,520 (2007) (being jointly assessed)
Widowed Person: €2,130 (2006), €2,310 (2007) (if you don’t have dependent children)

One-Parent Family Tax Credit: €1,630 (2006), €1,760 (2007)
If you have a qualifying dependent. See Revenue Guide IT9.

If you are married, make sure you are being jointly assessed
Leaflet IT 2

PAYE Tax Credit: €1,490 (2006), €1,760 (2007)
If you are a PAYE employee other than a proprietary director

Home Carer’s Tax Credit: Maximum €770 (2006, 2007)
If one spouse stays at home minding a child, a person over 65, an incapacitated person
Tax credit at standard rate – 20% - Is this correct?
Married couples who are jointly assessed.
Whose income does not exceed €41,000 (2006), €4,300 (2007)
The home carer’s income is not in excess of €5,080 (2006, 2007)
Good summary on CitizensInformation.ie
Leaflet IT 66

Dependent Relative Tax Credit: €80 (2006, 2007)
No tax credit is due if the relative’s income exceeds €11,913

Age Tax Credit Single/widowed: €250 (2006)/€275 (2007); Married: €500 (2006)/€550 (2007)
If you are aged 65 or over.
For married couples, only one person needs to be over 65

Incapacitated Child Tax Credit: €1,500 (2006), €3,000 (2007)
This tax credit of 1,500 (2006)/€3,000 (2007) can be claimed by the parents if a child has a permanent physical or mental disability

Incapacitated Person – allowance for employing a carer – Up to €50,000
This tax allowance of up to €50,000 at your highest tax rate is available where a person is employed to care for a person with a disability including a child. One or more family members of the person being cared for can claim the allowance.
Leaflet IT 47

Note: is this up to date with Budget 2007?

Nursing Home Fees
Tax relief is claimed under the general scheme for tax relief on medical expenses. Maintenance in an approved nursing home qualifies for relief. Most nursing homes are approved.
A long-term patient in a nursing home who pays tax under PAYE can apply to have the expenses allowed in his or her tax credit certificate.
If you pay for a parent's stay in a nursing home, you can claim this relief.
IT 6 Medical Expenses Relief (pdf)

Health/Medical Expenses Relief
Qualifying and otherwise unreimbursed medical expenses in excess of €125 per year; €250 if claiming for 2 or more people. From 2007 no excess applies.
Expenses for you, your spouse, your children or dependent relatives
Excludes routine dental and ophthalmic care
Includes prescribed drugs
Relief available at your highest rate of tax.
Leaflet IT 6
Fill in Form Med 1 and Form Med 2 (for qualifying dental treatment expenditure) at the end of the tax year to claim.

Private Health Insurance (VHI, BUPA, Vivas etc.)
If your employer pays for private health insurance on your behalf it will be taxed as a benefit in kind and you are entitled to claim a tax credit equal to 20% of the gross amount. See here.

If you pay for private health insurance directly, the premium is reduced by the tax credit at source, so you have no further claim.

Mortgage Interest
Your lender should be reducing your interest payments by the amount of tax relief you are due. Check that you are getting the right amount. Revenue leaflet
First time buyers

Revenue Approved Permanent Health Benefit Schemes
not to be confused with VHI or Bupa.
These are schemes which pay you an income if you become sick sometimes known as Income Continuance Plans.
Incidentally, these schemes are usually bad value as claims are difficult to make.

You get full relief on these at your marginal tax rate.

Some employers deduct the contributions from gross pay, so the tax relief is given at source. There is no further tax credit.

Rent Relief for Private Rented Accommodation
If you pay rent to a private landlord
Relief is due at the standard rate of tax (20%) subject to the following upper limits:
Single €1,650 (2006), €1,800 (2007)
Married/Widowed: €3,300 (2006), €3,600 (2007)
Both reliefs are doubled if you are over 55

Trade Union Subscriptions up to €60
A tax credit at the standard rate of income tax (20%) is available for Trade Union subscriptions.
If your membership subscription is €100, you will get a tax credit of €20

Note: is this correct? I thought that it was a flat rated credit of €60 @ 20% = €12?

Tax Relief on Bin charges, Water Charges, Sewage Charges
You must have paid your charges on time during 2005 to claim in 2006.
Tax allowance at 20% of amount paid. (check?)
Leaflet IT 27

College Fees
If your children or you are going to college
Relief at standard rate (20%)
On fees up to €5,000
Max value: €1,000 (20% of €5,000)
Leaflet IT 31

Dirt Refunds
If you are over 65 or if you are incapacitated and your income is below a certain level, you can apply for a refund of Dirt

Expenses in employment
Revenue grant flat rate expenses tax credits for certain occupations. See here for a complete list

Blind Person’s Tax Credit/ Guide Dog Allowance
If you or your spouse is blind at any time during the tax year you can claim this credit of 1,500 (2006), €1,760 (2007). If both of you are blind each of you can qualify.

Relief of 825 at your highest tax rate is given annually if you or your spouse have a guide dog
and you are a registered owner with the Irish Guide Dog Association.

Revenue Job Assist

If you have been continuously unemployed for at least 12 months
and are in receipt of Unemployment Assistance/Benefit, One Parent Family Payment, Blind Persons Pension, Disability Allowance or invalidity Pension for at least 12 months or Disability Benefit for at least 36 month PDFs: Leaflet - IT 58 (Employee) Leaflet - IT 59
(Employer) - For all Employer queries

Acknowledgements:
ClubMan;CCOVICH;Satanta;comhairle Disability Factsheet
 

ClubMan

Frequent Poster
Messages
43,866
Re: How to check if you are paying too much tax

Check, double check and maybe even treble check your annual tax details (payslips, P60, P45 if applicable, tax credits etc. etc.). I always thought that I was on top of this stuff and was up to date but recently when I filed some MED1 medical expenses claims for the past three years I received back P21 balancing statements informing me that I was due back €126 for 2003, €1108 for 2004 and €1610 for 2005! I haven't double (or treble!) checked the figures against my records but these refunds are a bit of a surprise to me since they are well above what I expected to get in relation to the MED1 claims themselves and suggest that myself and my wife had somehow overpaid tax in some other way unbeknownst to us until now. I just hope it's not a mistake on Revenue's part...
 

catgirl

Registered User
Messages
14
Re: How to check if you are paying too much tax

I remember hearing recently something about being able to ring the tax office a request a balance of the tax paid in the last three years to check if you have under or overpaid. Does anyone know anything about this?
 

NorfBank

Frequent Poster
Messages
2,103
Re: How to check if you are paying too much tax

Ring them and request your P21 balancing statements for the past 3 years, it will detail the tax you have paid in that period.
 

Booter

Frequent Poster
Messages
207
Re: How to check if you are paying too much tax

Are you getting the right personal tax credit?
Single Person: €1,630
Married Person: €3,260
Widowed Person: €2,130 (if you don’t have dependent children)
Shouldn't this read Married Couple: €3,260? This credit is not due to both persons in a marriage, but shared between them. (I'm mostly hoping to be corrected, but I think not!)
 

Brendan Burgess

Founder
Messages
37,936
Re: How to check if you are paying too much tax

I don't think so. The married couple is taxed as one person if they opt for joint assessment which most do. I would guess that I took the wording from the Revenue.

Brendan
 

Booter

Frequent Poster
Messages
207
Re: How to check if you are paying too much tax

I don't think so. The married couple is taxed as one person if they opt for joint assessment which most do. I would guess that I took the wording from the Revenue.

Brendan
Indeed: The Married couple is taxed as one person if they opt for joint assessment. The married couple still receives a total of exactly €3,260 between them. The exact same total as any two, randomly chosen, unrelated single persons. This is still €1,630 per person, whichever way assessment is carried out.
I am aware that Revenue use this terminology, and it's misleading on their behalf.
The facts are:
2 persons = €3,260
1 person = €1,630

It is misleading, indeed incorrrect to state that a Married person recieves €3,260.
It would be correct to state that a married couple recieves €3,260
 

extopia

Frequent Poster
Messages
3,109
Re: How to check if you are paying too much tax

Nothing here about credit for mortgage interest. But I'd rather not be the one to write it. :)
 

Brendan Burgess

Founder
Messages
37,936
Re: How to check if you are paying too much tax

Folks

This thread is supposed to be a summary of the main reliefs and not an explanation and discussion of the detail of every relief. We can have those discussions elsewhere. If something is wrong in the main post, please correct it here. If you have a question about how a relief or credit works, check other posts in the forum or open a new thread.

MandaC - I have put in a summary of your post in the first post - and split off your post into a separate thread

Extopia - I have put in links in the first post

Brendan
 
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