Claiming Tax Back from your P60 in 2012

Most people (in the private sector at least) will see their P60′s arrive now or in the next few weeks, as the Tax Refunds season starts.

So what are we expecting people to get tax back for in 2012. Here are the main things we are looking out for.

Universal Social Charge (USC)

This year the P60 is changing for the first time in my memory, with the addition of the Universal Social Charge.  And we are expecting a lot of people to be due refunds of Universal Social Charge.  Firstly, as it was charged on a week by week basis in 2011, if you changed jobs or were out of work for a period, you are very likely due a refund.

Secondly, a lot of Medical Card Holders, who were paying the Universal Social Charge at 7%, will be getting refunds. While there was poor awareness that Medical Card holders didn’t have to pay Income Levy and could get a refund, there is much greater awareness now of how your medical card can reduce your tax charge.

Medical Insurance

Medical Insurance premiums have only been going one way in recent years – up, up and up, so it pays even more in 2012 to make sure you are not over paying.  If you buy private Medical Insurance yourself, your charge is reduced by the 20% medical insurance tax credit, as the insurer gets that 20% back from the government. So you need do nothing.

But if your employer pays for any of your medical insurance, even 1%, the tax credit is not deducted from the premium on either the amount you pay or the company pays.   But you can reclaim the overpaid medical insurance as a tax refund.  With premiums going through the roof, we’ll see taxpayers receiving €2,000 plus in  4 year tax refunds in 2012.

Long Term Unemployed?

Have you been out of work for more than 12 months and went back to work in 2011?  Then you will probably be eligible to additional tax credits under the Revenue Job Assist tax relief scheme.   This is not a very straightforward scheme to understand in terms of eligibility or claiming the relief.  But a typical single person would be due a tax refund of  €762 in year 1 back at work and you could double that if you have 3 children for example.

Rent Refunds – Going, not gone

The Rent Tax Credit was brought in as a softly spoken whistle blowing scheme to bring more landlords into the tax net.  Well, with the advent of the NPPR,  PRTB and now the household charge, government agencies have the inside line on who the landlords.  and we are starting to see landlords targeted.  So the previous government thought:  Do we need to give out Rent Tax Credits any more?  No?  Let’s get rid of it they decided.

But while the tax credit is gone for first time renters post Dec 2010, it is only being phased out for those who started renting prior to Dec 2010.  And with the tax credit at €480 for a married couple in 2012, there are plenty of refunds due to people for renting in 2012.

Mortgage-holders – Annual Statement of Mortgage Interest

Know any bankers?  I’ll be brave and be first of us to admit I know some bankers!  And If you speak to someone working in branch banking they will tell you there are still a huge amount of people not claiming the Mortgage Interest Tax Relief at source (TRS).  And in most cases, those who aren’t receiving the mortgage interest tax relief at source presumed they were in receipt of it.

What’s the easiest way to tell if you are receiving it?  Well, you will receive an Annual Statement of Mortgage Interest for your home from the Mortgage company in the next few weeks.  This will tell you if you are receiving TRS and how much.  This can be work thousands per year, so if you are a mortgage holder, make it your New Years resolution to check your Annual Statement of Mortgage Interest this 2012.

Changed Personal Circumstances

It’s safe to say that the tax system in Ireland is not as complicated as the social welfare system.  But some parts of the tax system can leave us as confused as forty coats with his fifty pockets.

Tax Credits need to be adjusted to changes in your personal circumstances.  So if your job, home situation, marital – or parental –  status changed in the last year, make sure you tell Revenue or get your tax agent to reflect these changes in your tax credits.  For example, if you earn €40,000 and are married+ kids, then you will pay  €3,900 less in tax than an unmarried couple on the same wage.  What price a wedding ring did I hear you ask?

Those are some of the main things we think you should keep an eye on for refunds.  Why not get in touch with us now if you think you may be due a tax refund for 2012.