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Make
the Most of Your Tax Relief!
Here we look at some tax
incentives and reliefs that are available to individuals and
families. Each of the incentives below can be claimed by both PAYE
taxpayers and the self-employed. Taken together, they can yield
significant savings each year for most people. Self-employed
individuals can claim these reliefs when completing their annual tax
return. PAYE taxpayers can do so by completing a Form 12 tax return
or by contacting their local tax office.
Home
Carers Allowanc
e
This
tax credit amounts to €770 in 2003. It is available to married
couples where one spouse works at home while caring for a child or
an elderly or incapacitated person.
To qualify, the
carer's income (excluding Carer's Allowance) must not exceed
€5,080. The relief does not increase if more than one person is
cared for.
A reduced tax credit is
available where the income is between €5,080 and €6,620.
For example, Joe &
Mary Murphy are a married couple. Joe earns €50,000 per year. Mary
earns €4,000 from part-time work, and also minds their three young
children. Joe and Mary can avail of the €770 tax credit.
Medical
Expenses
Tax relief is
available on medical expenses incurred by an individual or family.
Relief is nor available on the first €125 spent on medical
expenses by an individual or €250 by a family, in a tax year.
Amounts paid over these limits qualifies for the relief.
Relief can be claimed at the 42% tax rate, if appropriate.
For example, the
Murphy family have total medical expenses of €1,000 in 2003, of
which €950 relates to Joe. If Joe claims tax relief as an
individual, he will get relief on €950 - €125 = €825. If he
claims the family relief, this would amount to €1,000 - €250 =
€750. Therefore he is better off claiming as an individual.
Most categories
of medical expenses qualify for the relief.
Rent
Payments
Tenants living in
private rented accommodation are entitled to claim tax credits in
respect of rent paid in each tax year. The max. credit for 2003 is
€508 for married couples and
€254 for a single person. Tenants aged over 55 years can
qualify for increased credits.
Educational
Fees
Tax Relief is
available for education fees paid to approved Third Level
institutions. To qualify, the fees must be in respect of an approved
course. The tax credit is 20% of fees paid, up to a maximum of
€3,175 in 2003. A similar incentive exists for approved I.T. or
foreign language training course fees, up to €1,270. A full list
of approved courses in available from the Revenue Commissioners.
Trade
Union Subscription
Trade union
members can claim a tax credit of €40 in 2004 on membership
subscriptions.
Service
Charges
Tax relief is
granted in respect of service charges paid to a local authority or
private contractor. Group water scheme subscriptions for private
houses can qualify for relief under this category.
The relief given is 20% of the charges paid.
Medical
Insurance & Mortgage Interest
Tax Relief for medical insurance (VHI & BUPA)
subscriptions and mortgage interest is granted at source and is no
longer given through the tax system. Medical insurance subscribers now pay a reduced premium (80% of the gross
amount) to the insurer and the insurer claims the tax relief back
from Revenue. A similar arrangement operates in the case of
qualifying mortgage interest.
