Top 10 tax hacks to transform your finances

People don’t like to think about tax.

It’s complicated, involves numbers (ugh!) and usually ends up with us losing money.

But what if the money were to go the other way?

If it were to go from the Revenue to us?

We might give it a second thought then!

And there are loads of ways tax money can flow back into our pockets from the State coffers – if only we would give it a second thought.

In fact, it’s extraordinary how much money we let slip through our fingers by wilfully ignoring the things we can claim for - but just don’t bother.

There is still a myriad of reliefs available.

You can get an expert like Taxback.com to go through your taxes – or do it yourself.

Taxback.com say the current average refund they get for an average client who asks them to look into their tax affairs is €995.

“Most PAYE workers would be eligible to claim at least something back from Revenue if they have never done so before,” said CEO Barry Flanagan.

Remember when you’re looking at your tax refund entitlements you can go back 4 years.

Given that it usually takes people under an hour to cobble together the necessary receipts and fill out the relevant documentation – it’s probably the easiest money you’ll ever make!

“Millions go unclaimed every year. This is primarily down to the simple fact that people either don’t know about the tax reliefs they are eligible for – or think the process of applying for a refund is “way too much hassle”,” said Barry.

Others are afraid to claim for fear that they’ll have missed something and end up owing the Revenue.

“People don’t want to know about tax,” said Laura Erskine, of Mummypages.ie who formerly working in finance.

“They bury their heads in the sand. It’s too complicated or they think they’ll draw attention to themselves and lose out in some way, which is completely untrue.”

“Home carer’s credit is one big one (see below). But it’s the same with other tax breaks such as medical expenses.“

Laura admits that “she is guilty of the same thing” to a certain degree even though she has expertise in this area. “We have to start teaching people about how to manage their money in schools.”

If you want to make inroads into claiming all the tax breaks you are entitled to – you can make a good start right here. We’ll show you the most neglected and lucrative perks out there going abegging – and how to claim them.

#1 Home Carer’s Credit

Home Carer’s Credit doesn’t sound that exciting. But it’s probably the biggest and most widely neglected major tax break that ordinary people can easily claim – but don’t.

It can be worth a cool €1200 into your hand and involves little hassle to claim. If you haven’t claimed it yet you could be due a rebate for four years – plus this year’s credit – a total of nearly five grand.

Yet Taxback.com estimated that“two thirds of the 280,000 families  entitled to home carer’s tax credit are unaware of its existence.”

“Over 63% of Irish people are simply unaware of this credit,” said Barry Flanagan, of Taxback.com

Another survey by Ireland’s most popular parenting website mummypages.ie – the very cohort that should be entitled to it – found a similar lack of awareness.

“I’d say two thirds at least from a (post Budget) survey it would have come up that they weren’t aware of that tax,” said the site’s mum-in-residence Laura Erskine.

The 80,900 who do claim Home Carer’s Credit got back on average €791 each – or €61m a year – at the last available official count (for 2014).

But the credit was just €810 back then. It’s even gone up in most budgets since then to a handsome sum of €1200 that you’d think would be well worth getting your hands on.

The rest of the 100,00o-plus families with children get nothing - when many of them could be getting the same.

In fact, if they claim back for this year – and four preceding years they missed out on going back to 2014 – the windfall could be enormous –nearly 5000 if you are fully qualified.

Home Carer’s Credit

• 2018 €1200

• 2017 €1100

• 2016 €1000

• 2015 €810

• 2014 €810

Total €4920

The Revenue insists that they do everything in their power to help people claim, pre-filling in forms with the credit already allowed for those who have claimed it before, for example. It also uses data on child benefit claims to automatically grant the credit each year.

Yet that still doesn’t explain the huge number of people – two thirds – who don’t seem to have heard of it!

Fianna Fail’s finance spokesman Michael McGrath said he has raised the issue in the Dáil as he suspected at least “tens of thousands” of people are not claiming this important benefit for families.

The tax credit can put €1,200 straight into the pocket of a couple where one person works and the other is a carer, including caring for children, he said.

“The name doesn’t help (awareness). Carer in a tax sense is normally associated with caring for a disabled or elderly person not their own children. We need an awareness campaign from the Revenue to make people better informed,” he said.

Who is entitled to Home Carer Credit?

The credit of €1,200 (2018) can be claimed by any married couple, where one spouse is a housewife/house husband and cares for one/more dependent persons, which includes their own children under 18.

“Given the current financial burden of childcare costs for many families, the tax credit could be a factor for any couples considering a one income household, as it allows the stay-at-home partner to work up to a limit of €7,200 a year,” said Taxback’s Barry Flanagan.

“In addition, if the stay-at-home partner’s income is in excess of the aforementioned limit, the credit may still be of use, as long as it doesn’t exceed €9,200.”

How to claim

Where the credit has not been granted automatically, a claim for the home carer credit may be made online via the Revenue.ie website, by completing a claim form in your local tax office or filling in the box in your annual tax return. Revenue information leaflet IT 66 provides full details of the credit.

#2 Claim your medical expenses

As much as €150m may be going unclaimed annually in medical and nursing home expenses.

That’s the shocking estimate of Taxback.com. “Each year, 400,000 taxpayers do claim back €150 million from Revenue in respect of medical expenses and nursing home fees alone. But whether it is through apathy, an unwarranted fear of Revenue, or simply because people remain unaware of their entitlements, we have estimated that as much as €150 million more could be left unclaimed.”

A lot of people don’t bother claiming medical expenses because the relief is not at the full rate of tax.

“Parents may think, it’s only 20%, why bother,” said Laura Erskine, of Mummypages.ie.

But it’s money in your hand is still worth claiming back whether it’s at 40% or 20%. Relief can be claimed on most unreimbursed expenses and on qualifying, non-routine dental expenses.

Here are some tips:

Keep your receipts – even if it is by taking a photo on your phone. You can even get apps such as Smart Receipts that will do it all for you.

You don’t have to produce them or send them in when you claim but you are required to keep them for six years in case Revene asks to see them. You can also claim for your children’s expenses as long as you paid the bills.

Routine dental expenses such as scaling, filling and extractions are not eligible for the relief. But specialist treatments are, including implants, which are covered underperiodontal treatment.

You can also claim for specialist food items – i.e. as a coeliac if you have a letter from your doctor stating that the food was bought for medical reasons. 

#3 Flat Rate Expenses

Most PAYE employees – especially outside the state sector - are unaware they can claim expenses for their work called “flat rate expenses.”

For example, shop workers are granted €121 per year and bar trade employees get €97 per annum.

Nurses who supply and launder their own uniforms can claim a deduction of €733. Deductions are available to doctors, engineers, plumbers, journalists, teachers and hospitality sector workers and most jobs and professions.

Flat rate expenses

Public sector

RTE Concert Orchestra  €2,476

Nurses:   (a) own uniforms €733

    (b)  own uniform/free laundry  €638

Teacher €518

Private sector

Nurses short term €80 

Drive Instructors €125

Plumber-welder €205

Fitters and mechanics* €85

Waiter €97

Waitress €64

Chef €97

Hotel Manager €191

Assistant Manager €127

Shop Assistants €121

Motor workers (own tools) €52

Once again, it’s appealing if you haven’t claimed as you can get tax back for up to four years.

You don’t even have to keep receipts. Just confirm that you are in a qualifying employment.

The Revenue sets a rate for each job and you can look up the annual allowance on its website www.revenue.ie.

There are some strange anomalies in favour of white-collar workers and the public sector (see table).

The regime has been developed over many years through negotiations between Revenue and unions, whose members are particularly good at making claims.

Revenue has stated that people, unions and professional groups who are not happy with their lot can always approach Revenue and request a review.

#4 Top up your Pension

You can’t beat salting money away in your pension for instant and highly gratifying tax relief at the highest rate of tax (40%). If you are on the higher tax bracket and you pay €100 into your pension – your salary will actually only reduce by €60 with the other €40 being provided by the Government.

“In many workplaces now employers match the pension contributions of employees – so if that were to happen in this instance then €200 would be invested into your pension – but would only cost you €60!,” said Jerry Moriarty CEO of the Irish Association of Pension Funds

Any investment returns are also free of tax. And at retirement you can take some of your savings as tax-free cash with the rest taxed as income.

If you haven’t joined your company pension scheme – or it doesn’t have one – that will all change soon with autoenrolment, where every employee has to be signed up to a pension scheme, although they can always opt out if they like. This would be highly inadvisable, said Jerry. “When you join an employer’s scheme they will pay into it. Not joining is like turning down extra pay.”

If you want to top up your pension to avail of tax relief – you can use what are called Additional Voluntary Contributions. These are particularly useful if you earned a lot one year and don’t want the Revenue to get their hands on your dosh.There are limits but not for most hard-pressed earners in the “Squeezed Middle” income groups.

#5 Rent-a-Room relief

You can help solve the housing crisis – and make a tidy tax-free profit – by renting out a room in your home.

The Rent-a-Room scheme allows you to earn up to €14000 completely free of tax. The income you get can’t be more than the limit or you’ll be taxed on the whole lot.

And unlike AirBnB, it also enables you to avoid Capital Gains Tax complications when you sell you home. That could be a big headache for AirBnB landlords given the rise in property values.

However, short-term lets do not qualify for the Rent-a-Room scheme.

#6 Go Electric

The case for buying an electric car has become compelling from a financial, driving and environmental point of view.

After years of apathy, with only 3000 electric cars on the road last year – the pedal has been pushed down to the metal and sales have taken off. (And yes electric cars are actually quite nippy)

Most of these motors are Nissan Leafs.

The last model has completely sold out and there is a long waiting list for the next one due to come on sale in April.

Why? It’s a game-changer. The problem with Electric Vehicles has always been range anxiety. For years you’d be lucky to get 160km out of a new one, and the range declined every year. Now, the latest Leaf, with a funky new design, keeps going for 378km. Battery life also remains at a high level for longer. And there is even a guarantee to protect against losses over 25%.

Meanwhile the financial case for going electric has got even stronger to the point where you can get these cars effectively for half price or less by availing of all the perks.

Here’s what you get (for starters):

· A €5,000 grant

· €4000 savings on running costs over four years

· €120 road tax (and lower insurance)

· Free home charger grant (worth €600)

· Public charging free

· Free tolls due to come in

For company cars, there is now no Benefit in Kind, which can save employees €4,368 into their hand. Here’s how that works:

And if you are a sole trader or small company owner, a little known budget measure allows you to depreciate the full price of the car in year one and save €11000 in tax.

Here’s how tha works:

Tables courtesy of Nissan.

#7 Tuition fees

These fees for full or part-time third level course, be it for yourself or for your child, can be eligible for sizeable relief. There is no limit on the number of individuals for whom you can claim. In fact, most claims for this type of relief come from parents with more than one child in college at the same time.

Relief is granted at 20% - the standard rate of tax. However, the relief is only applicable on any amount above €3,000 and there is a limit of fees, at €7,000 per course.

#8 Get on your bike.

A new bike – and equipment for it – worth up to €1000 can be yours for nearly half price through the generous Bike to Work scheme (if you’re on the top rate of tax).

Just get your employer to pay for a bicycle. You then pay back the money over 12 months – and claim tax relief at the top rate. See www.biketowork.ie.

#9 Claim overpaid tax

These tips are quite specific ways to save tax. But you can save money just by checking your normal tax bill. Check your tax, income levy and USC payments to ensure you’ve not overpaid in prior years. Taxback.com deals with people every day who have paid too much in tax, some who simply haven’t applied for refunds, some who didn’t realise they were on emergency tax, or others because they only worked in the country for part of the year, advises Taxback.com

#10 Tax help for caring families.

Caring for relatives who have become ill or infirm - or for children with disabilities is a heavy financial burden for thousands of Irish families. But there is help at hand.

The cost of care is hugely expensive. People are often left struggling to source funds to ensure their relative or child is cared for properly.

Yet Barry Flanagan of Taxback.com said: “In our experience, a significant portion of eligible taxpayers, appear to be unaware that there are still sizeable tax reliefs tied to these costs.”

You can only claim back for four years, “so it’s imperative that people act in time.”

Nursing home fees have remained as one of the few areas where you can claim tax relief at the higher rate. “Even more surprising is that not everyone is claiming this relief,” said Barry.

Similar to Nursing Home expenses, the tax relief available for Employing a Home Carer has also “bucked the trend” by increasing recently. You can claim on the cost of employing a carer for yourself or for another family member. In this case a family member must be a civil partner, spouse, child or relative, including a relation by marriage or civil partnership.

Another neglected tax break for carers is Incapacitated Child Credit which is a substantial help to families, providing €3,300 “into their hands” to help meet these onerous costs.

Full details of all reliefs and credits can be found on www.revenue.ie. Also see Taxback.com for more details and helpful tips.