28 December 2020
By Bryan Smyth
Tax Refund Checklist for Irish Workers
Only 5% of employers of Ireland’s remote workforce are paying the tax-free expense of €3.20 per day. This is according to a recent survey from Taxback.com in which 600 people, currently working from home, were asked if their employer is in a position to pay this additional income. The low numbers have prompted the tax experts to call on the thousands of people who now find themselves working from their home office, kitchen table or indeed their bedroom to ensure they claim the e-workers tax relief for which they are eligible, while at the same time, using the opportunity to claim any other reliefs they may be owed from the past 4 years.
Of the survey pool, 33% of respondents said they had never filed a tax return, while 27% said they’d only do this if they had a large expense in the year.
Marian Ryan, Consumer Tax Manager with Taxback.com spoke of the findings,
“We recently flagged the concern that many employers are feeling because they are not financially able to pay the €3.20/day tax free to cover their employees working from home expenses and these findings just solidifies this position. Currently, from a tax perspective, an employer can pay €3.20 a day to their employee to cover the additional costs incurred by working from home. While this payment is tax free, which means employers won’t be deducting PAYE, PRSI or USC from it, it isn’t mandatory and many businesses, who are already cutting budgets to stay afloat, are not in a position to pay this additional amount. This payment is certainly not widespread.
But the eworkers relief is available to all employees, and while it’s not huge amount, it’s still worth claiming. And the process to claim is not difficult. What’s more, the allowable percentage of broadband bills, was increased from 10% to 30%, in relation to working-from-home expenses
So we are calling on these workers to get what they’re owed – and while they are at it, to assess what other reliefs and refunds might be due to them. Irish people are poor at claiming tax refunds and the findings of this survey supports this contention – 6 in 10 people do not claim on a yearly basis, and more than 3 in 10 have never claimed at all!”
Taxback.com are encouraging people to “check the list” to ensure they don’t miss out:
- Stay and Spend 20% tax relief per person up to €625 – value of €125 per individual or €250 per jointly assessed couple. This applies until April 2021 and can include meals in local restaurants.
- Increased income tax relief for the Help-to-Buy Scheme – €30,000 (up from €20,000), or 10% (up from 5%) of the purchase price. Buyers can now max out on this grant on €300,000 homes, rather than the previous amount of €400,000
- Cycle to Work Scheme – increased from €1,000 to €1,250 (€1,500 for electric bikes). Taxpayers may now avail of the exemption once in any four-year period (previously a five-year period), so those who bought a new bike in 2016 or before can upgrade again now.
- Medical Expense Relief – Taxback.com stats show that only approximately 4 in 10 Irish people claim tax relief on the cost of their medical expenses. If you have paid for eligible health expenses you will be entitled to claim relief at your standard rate of tax – 20%. Day to day medical expenses such as doctor’s visits and prescription fees are often overlooked but can equate to a substantial amount over the course of a year.
- Flat Rate Expense Relief – these are a type of tax relief for PAYE workers in specific trades and professions whereby a person can reduce the amount of taxable income they have each year on the cost of certain expenses. The amount that can be claimed depends on the job because the rates are set by Revenue each year for various classes of employee. A full list of jobs and associated reliefs can be found online at Revenue.ie. Over 180 different occupations are entitled to flat rate expenses of varying amounts between €21 to €2476 per year with an average of €247 per year. Workers should note however, that flat rate expenses are not automatically deducted from pay so you have to be proactive and claim them yourself.
- EWorker relief – if a person works from home, they can apply for some tax relief on the cost of utilities and other expenditures that might be incurred over their working year. An employer can make a voluntary payment to an employee of €3.20 per workday without deducting any PAYE, PRSI or USC. This payment is intended to cover expenses such as heating and electricity costs. There is no obligation on the employer to make this payment and many employers are not in a financial position to provide their employees with this relief. If you are an eWorker and your employer does not pay you the tax-free amount of €3.20 per day you can claim eWorker tax relief instead. Revenue will allow 10% of your utility expenses as an eWorking expense, with the exception of broadband bills, of which 30% is allowable.
- Home Carer Tax Credit can be claimed by any housewife/househusband caring for their own children. The value of the credit for 2020 is €1,600. It can be claimed either if the spouse is at home full time, or if the spouse works part time and earns less than €10,400 in 2020 (if they earn between €7,200 and €10,400 will get a portion of the tax credit)
- If you are paying for tuition fees for a full or part-time third level course, be it for yourself or for your child, then you may well be entitled to tax relief on the cost.
- Nursing Home Relief – Anyone paying nursing home fees, either for themselves or for someone else, is eligible to claim relief at their marginal rate of tax. A person can claim up to 40% relief on nursing home or home care costs, up to a maximum of €75,000
- Rent a Room Relief – Where an individual lets a room in his or her sole or main residence as residential accommodation, the income may be exempt from income tax where the aggregate of the gross rents received in connection with the letting is below a certain threshold (€14,000). AirBnB type income will not qualify for Rent a Room relief.
- Rent relief: up to the 31 December 2017, you could claim a tax credit if you paid for private rented accommodation.
- If you care for a child on your own, you may be able to claim the Single Person Child Carer Credit (SPCCC). This child may be your own child; an adopted child; any child that you support and maintain at your own expense. The value of this tax credit is €1,650 per year. This will reduce the tax you pay by €31.73 per week. You will also be entitled to an increased rate band of €4,000.
- Dependant Relative Credit – If you’re caring for a dependent relative you may qualify for this tax credit
- Home Renovation Incentive and Rent Relief (both have now been phased out but can still be claimed for retrospectively in certain circumstances)