What do you need to know about your PAYE refund?

Many PAYE workers in Ireland wonder each year if they are due any tax back and what credits and expenses they can claim to increase their refund.
Our guide to Irish PAYE collection system below will help you identify easily any refund possibility.

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The definition of PAYE (Pay As You Earn) is simple: paying tax as you earn your income. This system places the responsibility on the employer to ensure the correct amount of tax is deducted and paid to Revenue. All cash allowances (such as salaries, bonuses, pensions etc.) and non-cash benefits (company car, employer paid accommodation etc.) must be paid/provided to employees after deduction of PAYE tax.

However, quite often the amount of tax deducted by the employer is higher than the exact amount that should have been paid under PAYE system regulations, thus resulting in potential PAYE refund available to claim back. Here are some of the most common reasons for this:

  1. Break in employment – if you were unemployed for any part of the year, then you have not fully utilized your PAYE and Personal tax credits.
  2. Employer error – your tax liability has been incorrectly calculated by your employer. This is a common mistake when you change your job.
  3. Termination of employment – in case you were made redundant you are entitled to receive part or all of your redundancy payment tax-free.
  4. Marital status change – if your personal circumstances have changed through marriage, separation or divorce, it’s important to review your tax position as you might qualify for additional tax credits.
  5. Tax Credits and Expenses – there are dozens of tax credits that can increase your refund drastically. Check out our summary on Credits, reliefs and expenses to find out more on what you can and can’t claim.

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Irish PAYE collection system is much more complex and this is just a short guide which aims to help you understand how any tax refunds are directly related to your personal circumstances. Many taxpayers are missing out on hundreds of EURO in unclaimed tax without even knowing it! Don’t be one of them, get your tax refund!

Use Irish Taxes free tax refund calculator to estimate if you are due any tax rebate or register with us today for a free review of your tax position for the last four years.

boost your refund

How to boost your refund: a complete guide to medical expenses

We all incur medical costs of some nature and sometimes these costs can take a bite out of the family budget, especially if you encounter unforeseen emergencies that are not covered by your insurance. Luckily, the Revenue Commissioners allow relief, giving taxpayers the opportunity to reimburse some part of the expenses made.

Health care expenditure is quite wide-ranging but in order to take advantage of this relief, you need to know what counts as a qualifying health expense for tax refund purposes. Learn more about the many different medical and dental expenses and get a better understanding of your health entitlements:

Services of a doctor or dentist

These include visits to doctors, consultant fees, diagnostic procedures carried out on your doctor’s advice (such as X-rays, MRI scan, etc.). However, visits to alternative medical practitioners are excluded.

Maintenance or treatment in a hospital

If treatment is in association with the services of a practitioner, then you are entitled to claim 20% tax relief on the amount incurred. Relief also applies to approved nursing home fees and is granted as a total income deduction, i.e. at the higher rate of 40%.

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Prescribed drugs and medicines

You can claim up to €144 per calendar month on prescribed medication. If you have incurred expenditure in excess of €144 per month, the excess can be reclaimed directly from the Health Service Executive under the Drugs Payment Scheme.

Physiotherapy and podiatrists services 

Allowable costs that qualify for tax relief include treatments by a chiropractor, osteopath, bonesetter or an acupuncture if carried out by a qualified practitioner.

Services for children

Tax back can be claimed on fees relating to speech and language therapy services carried out by a qualified therapist, educational psychological assessments made by an expert in the education of students and certain other expenditure in respect of a child suffering from life threatening illness.

Transport by ambulance

Tax relief may also be available for the cost of travelling other than by ambulance. For example, if the patient has to travel long distances because of regular continuing consultation, then a private car can be used and expenses reimbursed (special rules apply in determining the cost of travel).

Kidney patients

Home dialysis patients can make a claim for the amount spent on electricity, telephone, travelling, laundry and protective clothing related to their illness.

Medical, surgical, dental or nursing appliance

Costs incurred on the supply, maintenance or repair of appliances can be claimed back. Examples include Glucometer machine, Hearing aid, Orthopaedic bed or chair, Wheelchair or Wheelchair Lift, Exercise bicycle, Computer, False Eye, Wig.

Relief in respect of the following treatments is also available as Revenue Tax Briefings have outlined that it is Revenue practice to allow them to qualify as “health expenses”:

  • In Vitro Fertilization treatment
  • Cost of specialist foods for coeliac disease or diabetics
  • Routine maternity care
  • Laser vision correction surgery

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Dental and Optical treatment

You can get tax relief only on non-routine dental treatments. These are as follow:

  • Crowns and Bridgework
  • Veneers/Rembrant type etched fillings
  • Tip replacing
  • Gold posts and gold inlays
  • Root canal treatment, Periodontal treatment and Orthodontic treatment
  • Surgical extraction of impacted wisdom teeth carried out in a hospital

Costs on routine dental treatment (extractions, scaling and filling of teeth and provision and repairing of artificial teeth and dentures) as well as costs on routine ophthalmic treatment (sight testing and the provision of spectacles or contact lenses) are not allowable and they do not qualify for the relief.

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Expenses outlined above should not have been covered by any public/local authority or by private health insurance. If any part of that amount has already been reimbursed you can only get a tax relief on the excess.

It is a common misconception that expenses must relate only to yourself or that they should have been incurred in Ireland. Both incorrect! You can claim a refund on behalf of any other person as long as you have paid for the medical expenses even if incurred abroad.

It is important to note that when making your claim for tax relief on any health expenses, you must retain receipts as Revenue Commissioners might request them at some stage. So, if you don’t want to leave money behind, it is worthwhile to get into the habit of keeping a good record of your receipts.

To find out how much you may be due back use Irish Taxes free tax refund calculator or contact us and we’ll help you claim back your maximum tax refund including all your medical expenses!

Self-Assessed Tax Return

Who needs to file Self-Assessed Income Tax Return?

Do you have additional sources of income on top of your employment earnings? If the answer is Yes, there is a high chance you may need to file a Tax Return (form 11) under the Self-assessment system. Read on if you want to avoid any tax issues and late filing penalties!

What qualifies as additional sources of income (Non-PAYE income)?

Additional sources of income are any other sources different to employment income. These could include self-employment, rental income, dividends and deposit interests. Excluded from the definition of “non-PAYE income” are Social Welfare Payments or Pensions and Legally enforceable maintenance payments received.

Who needs to file a tax return?

  • Anyone with gross non-PAYE income of EUR 50 000 or more (even when this income has been reduced to NIL or a negligible amount due to deductions, losses, allowances and other reliefs);
  • Anyone with gross non-PAYE income of less than EUR 50 000 but net non-PAYE income of EUR 3174 or more;
  • Anyone whose non-PAYE income (regardless of amount) has been reduced to NIL: the reason for this is that NIL income cannot be coded against your PAYE tax credits so you will be obliged to file a Tax Return;
  • Proprietary directors – all proprietary directors (any director of a company who has more than 15% of the ordinary share capital of the company) are charged under the SA scheme and required to file a SA Tax Return. Where joint assessment applies, their spouse is also brought under the SA provisions;

The EUR 50 000 limit applies to income from all non-PAYE sources and not separately from each source. Where an individual has various non-PAYE sources of income, all of those should be added together when determining the EUR 50 000 threshold.

A married couple or civil partners, who are jointly assessed, are entitled to earn a total of EUR 3174.00 before the assessable spouse is brought under the SA scheme and required to file a tax return.  However, you may opt for separate assessment or single treatment in which case each spouse will have a limit of EUR 3174.00.

Once you become a “chargeable person” (a person required to file a tax return) and provided you continue to have the Non-PAYE sources of income in future years, you will be required to file a Tax Return for those years, regardless of the amount of the income.

Tips and tricks

If you fall into one of the categories above and you are required to file a tax return under the SA system, make sure you do it on time to avoid any late filing surcharge. You should submit your tax return for each tax year before 31 October of the next year. So, this means that your tax return for 2016 will be due before 31 October 2017.

You do not need to file a Tax Return if:

  • Your gross non- PAYE income is less than EUR 50 000
  • Your net non-PAYE income is less than EUR 3174
  • Your non-PAYE income has been coded against your PAYE tax credits or taxed at source

If you are still unsure whether you need to file a tax return, contact us and we will review your situation to figure this out. If form 11 is required, one of our tax technicians will guide you through everything to ensure you’re not missing a trick that could save you hundreds of euro in taxes.