4 ways to reduce your taxes
- Aideen Leacy
- Mar 24, 2018
- 2 min read
Below are the the four most common means by which any individual in Ireland can reduce their income tax. Feel free to leave a comment if you have any queries.
1. Pension payments
Paying into a pension is first and foremost a great way to reduce your PAYE tax and also save a little money for the future. In some cases, certain employers may also have schemes in place by which they will match your contribution with a contribution of their own.
Contributions (to approved schemes) made during the year by you and your company are taken away from your gross pay prior to the calculation of PAYE.
On retirement, a portion of the retirement lump sum may also be paid out tax free -providing a double tax benefit.
2. Medical expenses
Although probably the most well-known credit, claiming tax back on your medical receipts has been described as one of the most underutilised tax credits availed of with some sources stating that only 1 in 5 people claim this credit.
20% of the cost of your medical bills and receipts can be claimed up to four years after the cost was incurred. Therefore, if you currently have unclaimed medical receipts for the last number of years, you can reclaim the 20% as far back as 2014.
Some common medical expenses which are not allowed are as follows:
Routine optical (eye care) expenses;
Health insurance expenses; and
Routine dental expenses.
3. University fees
There is a tax credit of 20% allowed in respect of qualifying fees paid by you on behalf of a student to qualifying universities and colleges.
The first €3,000 of expenses are not allowable and the fees must be paid in the year in which a credit is claimed.
4. Income splitting between spouses
Where you or your spouse are in receipt of rental income or investment income, tax may be saved where one spouse earns less than the other. Income splitting is the process of spreading income between spouses so that low income earners exploit their lower USC thresholds as USC is taxed on an individual basis and not jointly.
If you have any questions on the above or would like a free consultation please contact Tax Action Ireland via facebook or on (085) 1394843.
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