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Agenda 1. Tax returns 2. Understanding how the PAYE System operates 3. Check your Rate Bands & Tax Credits 4. Maximise your Allowances and Reliefs 5. Sharing Credits 6. Other Taxable Income.
Tax Returns
How many people here do tax returns? In 2016, the average tax rebate for PAYE Midas members was € 1,100! Source: Midas PAYE customer statistics 2016.
Why Public Sector Employees Overpay Tax Factors Repercussions x Not sharing credits and cut-off points in a Married tax efficient manner Change Job x Not claiming the appropriate tax credits, reliefs, rate bands, etc Agency Work x Not availing of all allowances & Income changes entitlements Birth of child x Tax Credit Certificate details incorrect Human error when calculating and x Incorrect allocations accumulate year on year. deducting tax.
Tax reliefs/allowances available Employment expenses Salary Protection €€ €€ Pension €€ Tax Bands incorrect €€ Home Carer €€ Rent Credit €€ You can claim back tax for a period of up to 4 years!
Irish Historic Income Tax Rates 60% 53% 48% 50% 46% 44% 42% 41% 40% 30% 27% 30% 24% 22% 20% 20% 20% 10% 0% 1990/91 1994/95 1998/99 2000/01 2004 2007 Current rates are 40% + 20%. Source: Revenue
Payslip analysis Review your payslip to ensure you are getting what you are entitled to. Check your point on the salary scale Check your Standard Rate Cut Off Point (SRCOP) Check your deductions Incremental Credit refunds How much tax are you paying?
FAQ’s • Am I on the right Point of Scale? • What is the Standard Rate Cut Off Point (SRCOP) and how does it affect my take home pay? • What is a tax credit? • What is my PRSI class – and what does it mean? • What are the ultimate charges against my Gross pay? • What impact will voluntary deductions have on my pay?
5. Check your deductions 1.Check your 6. Not taxable Point on the Salary Scale 3. Standard Rate 4. Should be at 2. Check your PRSI Cut-Off point: least 128 if class Should be at PAYE least €1,300 (A1 / D)
The PAYE System
Useful Tax Documents • A recent payslip • P45 • P60 • Your tax credit certificate.
Tax Credit Cert It instructs your employer on the amount of Tax to deduct. If it’s wrong…… YOU PAY too much or too little! Text “CERT” and your PPSN to 51829 to get a copy of your Cert.
How to calculate Income Tax Gross Salary/Pension/Other Income - (PRSI & USC) Less Superannuation/Pension Levy/AVC/NSP/PHI = Taxable Income Apply Rate Bands - 20% & 40% Deduct Credits = Income Tax Liability
Check your Tax Credits & Rate Bands
Methods of Assessment Single Assessment – Taxed as a single person throughout the year and at end of year review. 3 Separate Assessment – Taxed as a single person methods throughout the year. Unused credits and rate bands may be transferred between spouses after year end. Joint Assessment – Taxed jointly throughout the year. Allows flexibility in allocating tax credits and rate bands.
Rate bands • First €33,800 taxed at : 20% • Earnings over €33,800 taxed at: 40% 2015 example - A Public Sector Employee earning €40,000 pays €9,240 in tax before they apply their credits and €5,940 after applying their tax credits.
Tax credits The more credits you accumulate, the less tax you pay. ….they are worth money and shouldn’t be ignored!
Standard Rate Bands - 2017 Personal Circumstances 2017 Single €33,800 @ 20% Balance @ 40% Lone Parent €37,800 @ 20% Balance @ 40% Married with one income €42,800 @ 20% Balance @ 40% Married with two €67,600 @ 20% incomes* Balance @ 40% *transferrable between spouses, maximum of € 42,800 with one spouse.
Personal Tax Credits - 2017 Personal Circumstances 2017 Single Person Credit €1,650 Married Person Credit €3,300 PAYE Credit €1,650 Single Parent €1,650
Widowed Tax Credits 2017 Personal Circumstances 2017 Widowed Person €2,190 Widowed Parent (Bereaved in 2013) €2,250 Tax Credit Bereaved: 2014 €2,700 2015 €3,150 2016 €3,600
Other Tax Credits Home Carer - €1000* Incapacitated Child - €3,300 Dependant Relative - €70** Age Credit - Single €245 / Married €490 *Cannot have an annual income in excess of €7,200. **Cannot be claimed in conjunction with Home Carer’s Credit.
Maximise your Allowances & Reliefs
Tax on your State Pension Since 1 st January 2012: Taxable – Widows/Old Age/Jobseekers Revenue will deduct your tax credits & rate band by the amount of income received This will reduce your expected salary from your other pension/employment income Revenue will review their figures annually.
Exemption Limits 2017 for over 65’s Personal Circumstances 2017 Single/Widowed over 65 years of age €18,000 Married (over 65) €36,000 Increased by: 1 st child €575 2 nd and subsequent child €830 Marginal Relief 40%
Flat Rate Expenses Agreed between Revenue and your Union for expenses incurred directly related to the nature of your employment. Relief at your marginal tax rate Teachers/Lecturers on full hours: €518 Principals, Professors, Heads of Schools/Departments: €608 Teaching Council: €90 Part-time Lecturers/Teachers (mainly teaching + P.E./Guidance Counselling) get an additional: €126
How much is this allowance worth to you? €207 per year if you are earning €40,000!* *for a teacher/lecturer on full hours claiming the flat rate expenses tax credit €518.
Flat Rate Expenses Agreed between Revenue and your Union for expenses incurred directly related to the nature of your employment. Relief at your marginal tax rate • Supply and launder your own uniforms - €733 • Supply your own uniforms but are laundered free - €638 • Launder uniforms that are supplied by employer - €353 • Uniforms supplied and laundered by your employer - €258 • Nurses on short term contracts through an agency - additional €80
How much is this allowance worth to you? €293 per year if you are earning €40,000!* *nurse claiming the flat rate expenses tax credit @ €733.
• Relief for Tuition Fees in approved 3 rd Level Tuition Fees Colleges • Primary 2 year+ / Masters 1 Year + • Ireland and EU based courses • Limits: €7,000 total fees per person p.a. • Exemption (per household): – First €3,000 for full time course not claimable – First €1,500 for part time course not claimable.
Claim relief on your Medical Expenses 1. Make your private medical insurance claim (www.hia.ie) Tax relief at source, unless paid by employer. 2. Avail of the Drug Payments Scheme - max €144 pm ( www.hse.ie) 3. Apply for your tax relief through Form Med 1.
Qualifying Health Expenses Doctor, GP, consultant or hospital fees Items or treatments prescribed by a Doctor Approved nursing home fees (40%) Non-routine Dental Treatments Prescribed medicines Certain dietary products, e.g. Coeliac/Diabetic. ***keep the receipts for 6 years***
Rent Rent Credit • Renting in a private residential property • Must have been renting on 7 th December 2010 • 2017 Credit: – €160 if aged 55 or over – €80 if under age 55 • To be phased out by end 2017. Rent a Room Relief Scheme from Jan ‘15 • Tax-free income where owner occupier • Maximum is €12,000 per annum including meals, laundry etc. • Must still be declared to Revenue.
Earning more than €5,000 outside of PAYE Income If you earn more than €5,000 of income from any source outside the PAYE system you are obligated to file a return annually. If you don’t file a return, penalties and late fees apply.
Other Income
Rental Income Income - Expenses = Taxable Profits Example of allowable expenses • Mortgage interest (80%) • Insurance • Mortgage protection • Management Fees • Letting Fees • Repairs & Maintenance • Advertising • Accountancy fees • Painting & Decorating • PRTB • Utility bills • Wear & Tear on Fixtures & Fittings.
Rental Income 2016 Taxpayer’s Revenue’s View View Monthly Rental Income €1,000 €1,000 Mortgage repayment / (€1,200) (€720)* interest Profit / (Loss) (€200) €280 * Assuming 80% of repayment is interest, restricted to 75% allowable (2016).
Other Income • Landlord • Self Employment • Deposit Interest where DIRT paid • Foreign Income • Irish Dividends where 20% tax deducted.
Pay Related Social Insurance (PRSI) From 1 st Jan ‘13, the first €127 is no longer exempt. • Class D (entered public sector pre 1 st April 1995) @ 0.90% • Class A (entered public sector post 1 st April 1995) @ 4% • Class M (Occupational Pension) @ 0% Exemptions & Reliefs: All income is exempt from PRSI from age 66.
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