Welcome to tax bytes for expats. The top tax tips

you want to know as an expat, the podcast is here to help

answer the common queries and concerns expats have when moving to

or from Ireland. Complex taxes explained

simply, we'll focus on the irish and international

tax issues to be aware of to ensure you save time,

money and stress. Hi

there, Matthew Bliss here, producer and editor for this amazing

podcast and fellow expat. While our illustrious

host Stephanie Wickham is on her working holiday, we thought we'd

revive some educational episodes in the feed. As

expats, we may be coming from countries where we expect to claim certain

expenses back during our tax return. That is, if we

even need to do one. In Ireland, things will obviously be

different. So in this week's replay, Steph is discussing the tax

credit scheme in Ireland and the potential claims you can make depending

on your circumstances when you process your return to help

reduce that tax bill. Thanks for subscribing to tax bytes for

expats and enjoy the episode.

Okay, so me again, just me today, and

what I wanted to talk about was something that

is probably quite relevant to anybody listening to this

podcast who is an irish taxpayer. And that is

the, the tax credits and the tax mistakes that we

see people making very frequently when they do their own taxes.

So if you are an irish taxpayer and

you have any interest in reducing your irish tax liability, this might be an

episode that holds some value for you.

So I suppose it's probably worth starting by saying

that if you are, for example, a us citizen, if you are a

uk taxpayer or you're coming from somewhere like Australia, where

generally we see that everybody must file a tax return.

You know, that is not how the system works in Ireland. It's slightly different. And

I think the easiest way to kind of describe the system in Ireland is

to say that if you're a pay as you are

employee, you do not have an obligation to file a tax return. And

so, you know, that would apply to the majority of people in Ireland who

only have employment income that is taxed at

source. But even if that is the

case, this episode may hold some value for you. And the reason is

because in Ireland, the tax system

operates such that taxes due are calculated and

they are then reduced by an individual's personal

entitlement to tax credits. Broadly

what we'll see, if we use the pay as you earn employee

as an example, they will have a personal tax

credit. They will also have an entitlement to a pay as you earn credit,

and you may hear when the budget's announced, they generally tend to increase

these credits year on year and that will slightly

reduce an individual's overall tax rate. But

what we see commonly is that people

don't necessarily check to see if they have an additional entitlement to

tax credits that they can actively claim themselves

via their online revenue. My account

and I suppose these additional tax credits can be taken

advantage of in one of two ways. They, in some instances,

can be coded to your tax credit certificate. What that means

is if you, for example, have an additional tighten to a credit, you

can have it added to your ongoing tax

credits such that your payroll will take them into account. So when you're getting paid

every month, you're getting slightly more cash in your

pocket, or at the end of the year, you can go in and add

them to your tax profile for that year.

And all things being equal, we'd hope that it generates a

refund of sorts depending on the quantum of the credit. So that's the first

thing is, you know, be conscious of your

obligations to file a return, but be aware that for most people

who are in employment and who have no other sources of income, there

isn't an obligation to do a return. But there is always the choice

to check that their situation is optimized.

So then maybe to talk about some of the credits that we see as

routinely available and yet routinely missed. The

first one that we see as being missed by

a lot of people is where an employer is

providing you with health insurance. So, you know, we see

now, you know, benefit package. They can, they can all look quite

different, but it is common for employers to offer a

group health insurance scheme. And let's say I work for

you, you know, Dublin based tech company. Dublin based tech company

provides me with health insurance that is a taxable benefit in

kind. So I see on my page, slipdenne, it's usually described

as bik medical on my pay slip. That is

essentially me paying tax on the value of the

health insurance policy that my employer has provided for me. It's not tax

free, basically, and you're paying tax on it.

In those situations where your employer is paying the policy

and you are picking up the tax cost, there's a tax

credit that a lot of people miss so broadly, where the cost of the

premium is 1000 euro for a calendar year

and it's an irish premium, you're entitled to

a tax credit of 200 euro for an adult, up to

200 euro per adult, and up to 100

euro if the cost of the policy is at least 500 euro.

Annually for a child, a child being somebody usually

under the age of 18. So the reason why,

you know, people miss this is because they don't realize that they have to actively

do something to claim it. So revenue will take the tax on the

benefit, but they won't automatically give you the tax relief on the

premium you pay. And I think this is probably a good point to say that

if you have a health insurance policy that you pay directly yourself,

I'm not talking to you because you are getting tax relief at source

on the premium that you pay. So in other words, if I go

out in my own capacity and take out a health

insurance policy, the tax relief has been given to me at source. There's no

action needed in that front. I'm specifically talking where you're not paying the policy, your

employer is, you're paying tax on the benefit of that. So how do you

do it? You basically need to make sure that your revenue, my account is

active, you log in and there's a specific section

where you can include the cost of the

policy paid for a specific year, and you

include details of who was covered on it, whether they were an adult or a

child, and then revenue will apply a tax

credit for the year in question. If you're doing this, for example, for

2022, we would expect that you would be entitled to

a refund of sorts. Because what's happened is the tax that's been deducted from your

salary on an ongoing basis hasn't taken into account this additional tax

credit. That's one that people miss. The other

thing that gets missed routinely is home care and tax

credit so broadly. And there's some great information on

revenue's website about this, about the different ways it works and the levels it works

too. But without kind of going into that detail

today, suffice to say, if you have a

married couple, one parent is a stay at home parent and

the other parent is working, it is always worth determining whether or not

the home care tax credit is available.

It was 1600 in previous years and I think it's been

increased. But broadly now what we're seeing is that

it reduces a family's tax liability. And I suppose given the cost

of living crisis and how high irish tax rates are,

it always worth considering whether or not the stay at

home parent meets the conditions to claim that home care

tax credit. That's the one that we see routinely missed. That can be coded to

your tax credit cert as well. Or you can go back at the end of

the year and claim that nice refund of taxes that have been

withheld from the other spouse. Obviously, we're assuming as well that this

would be in a situation where you're jointly assessed on revenue system.

On the point of joint assessment, you know, it often comes up when people are

moving to Ireland, should we be assessed as a married couple? Should we be

assessed together jointly or separately?

So generally what I say to people is there's no disadvantages

that we see for being assessed together.

It generally allows you to take advantage of

any tax advantages that arise because of

certain life events. So, for example, if you're jointly assessed, it

allows the married couple to share

certain personal tax credits automatically if

one spouse doesn't have enough income to absorb them all, for example.

But there's no requirement to be jointly assessed. You can

elect to be assessed separately as a married couple.

But again, the question would be why is there any reason to

do it broadly, we don't see it commonly that people would have

an advantage for not being assessed together and

that life event of marriage is one that does warrant consideration as well.

And we would generally say to people, you know, in the year of

marriage, a married couple must be assessed

separately and the subsequent year they can be

assessed jointly. But for the year of marriage, it's always worth going

back and just checking to see whether or not there is any

advantages to joint to lodging a year of marriage claim, which

is essentially a flush through of any tax benefits that arise

from joint assessment from the point of marriage onwards.

And again, some great information on Revenue's website about how to lodge a year of

marriage claim. And you know, this is where

individuals coming to Ireland do well to have PPS

numbers and an act of my account so that they can go in

online and make any changes directly electronically through revenue

system. To the extent that this is done now, revenue have a

real time pay as you earn system. And this means that changes made in

your MyGov account should flow through in real time to your next

payslip depending on when your pay run is and when

the change was made. But it's essentially a real time system.

A few other things that, you know, kind of come up people are more familiar

with, but it's worth mentioning is, you know, to the extent that your health

expenses or non routine dental haven't been

reimbursed by a health insurance policy, it's always worth just

maintaining. You know, I always say to people, keep a Google sheets

document, save your receipts, top

them up, and you can lodge these claims via revenues

account or add them to a full form.

Eleven tax return at the end of the year, there's quite

a list of most medical procedures are

covered and anything that's non routine dental

is covered. Revenues website goes

into the definition of what, you know, routine dental is. And we would

always review clients files to make sure that those expenses haven't been

claimed in error. And then the other one would be remote working

expenses. And you know, usually the message around this

is we do see remote working is not necessarily as

common as it was during the pandemic. It's definitely becoming less common. But where

an individual is working from home, there is a

small entitlement to claim a percentage

of the costs related to broadband

and electricity. In honesty,

it rarely translates to a large repayment of tax

for any client. But where we see people

potentially in a financially better situation is if the

employer is providing them with a

daily payment, which is 320

per day, they can be paid by the employer tax

free. And though that 320 is designed to cover the costs of working from

home, paying their own broadband, electricity and things like that,

that generally tends to give a much better financial outcome for an individual.

But of course, the employer is now covering that

cost, as opposed to the employee covering it themselves and

taking a small tax deduction at the end of the year.

There are a couple of things that we generally see people

missing. I would always say to people who have questions about their tax

situation, and there's some good online calculators that will let

you plug in, you know, your income

and get an estimate of what your, your take home pay

is or should be. And you can usually add the option to kind

of add some tax credits there to us. You know, run it with

the tax credits, run it without, and it gives you a really good example of

the value of, of certain credits to you

personally, because it will be different depending on your circumstances, your level of income,

and whether you're married. And obviously then the many, many tax

credits that we haven't listed today. But there is some great information

on revenue's website and it's always worth throwing your eye over that to

see if there is any of them that you would meet the conditions to apply

for and having those applied either against your tax credit certificate

or claiming them at the end of the year. So hopefully that's been helpful.

As always, drop us a line infoxpathtaxes, ie, if you have

any questions. We always are really interested to hear topics that

you'd like to hear about. And in upcoming

episodes, one of the things that we're going to be focusing on is talking to

people who've made the move back to Ireland and asking them to kind of step

us through how that journey was for them and the pros

and cons of returning to Ireland from overseas or moving here for the first

time. Because I think when we speak to clients as well as the

tax issues, those things are topics that people are always

keen to hear about when they're planning and navigating their move back to

Ireland. So we'll talk to you soon. And as always, thanks very much for listening.

Thanks for listening to tax bytes for expats. Please do leave a

rating or review wherever you listen to your podcast. And as always,

remember to take professional tax advice specific to your

personal circumstances before acting or refraining from action

in connection with the matters dealt with in this series. The

material in this podcast is intended to give general guidance only.