Midas is a tax based service and not a regulated financial product. - - PowerPoint PPT Presentation

Midas is a tax based service and not a regulated financial product. Cornmarket Retail Trading Ltd. is a wholly-owned subsidiary of Cornmarket Group Financial Services Ltd. Telephone calls may be recorded for quality control and training purposes.

Agenda

1. Tax returns 2. Understanding how the PAYE System operates 3. Check your Rate Bands & Tax Credits 4. Maximise your Allowances and Reliefs 5. Sharing Credits 6. Other Taxable Income.

Tax Returns

How many people here do tax returns? In 2016, the average tax rebate for PAYE Midas members was €1,100!

Source: Midas PAYE customer statistics 2016.

Why Public Sector Employees Overpay Tax

x Not sharing credits and cut-off points in a tax efficient manner x Not claiming the appropriate tax credits, reliefs, rate bands, etc x Not availing of all allowances & entitlements x Tax Credit Certificate details incorrect x Incorrect allocations accumulate year on year.

Repercussions

 Married  Change Job  Agency Work  Income changes  Birth of child  Human error when calculating and deducting tax.

Factors

You can claim back tax for a period of up to 4 years!

Employment expenses €€

Salary Protection €€

Tax reliefs/allowances available

Tax Bands incorrect €€

Pension €€

Rent Credit €€

Home Carer €€

Irish Historic Income Tax Rates

Source: Revenue

Current rates are 40% + 20%.

30% 27% 24% 22% 20% 20% 53% 48% 46% 44% 42% 41% 0% 10% 20% 30% 40% 50% 60% 1990/91 1994/95 1998/99 2000/01 2004 2007

Payslip analysis

• Check your point on the salary scale
• Check your Standard Rate Cut Off

Point (SRCOP)

• Check your deductions
• Incremental Credit refunds
• How much tax are you paying?

Review your payslip to ensure you are getting what you are entitled to.

• Am I on the right Point of Scale?
• What is the Standard Rate Cut Off Point (SRCOP) and how

does it affect my take home pay?

• What is a tax credit?
• What is my PRSI class – and what does it mean?
• What are the ultimate charges against my Gross pay?
• What impact will voluntary deductions have on my pay?

FAQ’s

1.Check your Point on the Salary Scale

• 2. Check your PRSI

class (A1 / D)

• 5. Check

your deductions

• 4. Should be at

least 128 if PAYE

• 6. Not taxable
• 3. Standard Rate

Cut-Off point: Should be at least €1,300

The PAYE System

Useful Tax Documents

• A recent payslip
• P45
• P60
• Your tax credit certificate.

Tax Credit Cert

It instructs your employer on the amount of Tax to deduct.

If it’s wrong……

YOU PAY too much or too little!

Text “CERT” and your PPSN to 51829 to get a copy of your Cert.

How to calculate Income Tax

Gross Salary/Pension/Other Income - (PRSI & USC) Less Superannuation/Pension Levy/AVC/NSP/PHI = Taxable Income Apply Rate Bands - 20% & 40% Deduct Credits = Income Tax Liability

Check your Tax Credits & Rate Bands

Methods of Assessment

Single Assessment – Taxed as a single person throughout the year and at end of year review. Separate Assessment – Taxed as a single person throughout the year. Unused credits and rate bands may be transferred between spouses after year end. Joint Assessment – Taxed jointly throughout the year. Allows flexibility in allocating tax credits and rate bands.

3

methods

Rate bands

• First €33,800 taxed at: 20%
• Earnings over €33,800 taxed at: 40%

2015 example - A Public Sector Employee earning €40,000 pays €9,240 in tax before they apply their credits and €5,940 after applying their tax credits.

Tax credits

The more credits you accumulate, the less tax you pay.

….they are worth money and shouldn’t be ignored!

Standard Rate Bands - 2017

Personal Circumstances 2017 Single €33,800 @ 20% Balance @ 40% Lone Parent €37,800 @ 20% Balance @ 40% Married with one income €42,800 @ 20% Balance @ 40% Married with two incomes* €67,600 @ 20% Balance @ 40%

*transferrable between spouses, maximum of €42,800 with one spouse.

Personal Tax Credits - 2017

Personal Circumstances 2017 Single Person Credit €1,650 Married Person Credit €3,300 PAYE Credit €1,650 Single Parent €1,650

Widowed Tax Credits 2017

Personal Circumstances 2017 Widowed Person €2,190 Widowed Parent (Bereaved in 2013) Tax Credit Bereaved: 2014 2015 2016 €2,250 €2,700 €3,150 €3,600

Other Tax Credits

• Home Carer - €1000*
• Incapacitated Child - €3,300
• Dependant Relative - €70**
• Age Credit - Single €245 / Married €490

*Cannot have an annual income in excess of €7,200. **Cannot be claimed in conjunction with Home Carer’s Credit.

Maximise your Allowances & Reliefs

Tax on your State Pension

Since 1st January 2012:

• Taxable – Widows/Old Age/Jobseekers
• Revenue will deduct your tax credits & rate band by the

amount of income received

• This will reduce your expected salary from your other

pension/employment income

• Revenue will review their figures annually.

Exemption Limits 2017 for over 65’s

Personal Circumstances 2017

Single/Widowed over 65 years of age €18,000 Married (over 65) €36,000 Increased by: 1st child 2nd and subsequent child €575 €830 Marginal Relief 40%

Flat Rate Expenses

Relief at your marginal tax rate

 Teachers/Lecturers on full hours: €518  Principals, Professors, Heads of Schools/Departments: €608  Teaching Council: €90  Part-time Lecturers/Teachers (mainly teaching + P.E./Guidance Counselling) get an additional: €126

Agreed between Revenue and your Union for expenses incurred directly related to the nature of your employment.

*for a teacher/lecturer on full hours claiming the flat rate expenses tax credit €518.

€207 per year if you are earning €40,000!* How much is this allowance worth to you?

Flat Rate Expenses

Relief at your marginal tax rate

• Supply and launder your own uniforms - €733
• Supply your own uniforms but are laundered free - €638
• Launder uniforms that are supplied by employer - €353
• Uniforms supplied and laundered by your employer - €258
• Nurses on short term contracts through an agency - additional €80

Agreed between Revenue and your Union for expenses incurred directly related to the nature of your employment.

*nurse claiming the flat rate expenses tax credit @ €733.

€293 per year if you are earning €40,000!* How much is this allowance worth to you?

Tuition Fees

• Relief for Tuition Fees in approved 3rd Level

Colleges

• Primary 2 year+ / Masters 1 Year +
• Ireland and EU based courses
• Limits: €7,000 total fees per person p.a.
• Exemption (per household):

– First €3,000 for full time course not claimable – First €1,500 for part time course not claimable.

Claim relief on your Medical Expenses

1. Make your private medical insurance claim (www.hia.ie) Tax relief at source, unless paid by employer.

• 2. Avail of the Drug Payments Scheme - max €144 pm (www.hse.ie)
• 3. Apply for your tax relief through Form Med 1.

Qualifying Health Expenses Doctor, GP, consultant or hospital fees Items or treatments prescribed by a Doctor Approved nursing home fees (40%) Non-routine Dental Treatments Prescribed medicines Certain dietary products, e.g. Coeliac/Diabetic.

***keep the receipts for 6 years***

Rent

Rent Credit

• Renting in a private residential property
• Must have been renting on 7th December 2010
• 2017 Credit:

– €160 if aged 55 or over – €80 if under age 55

• To be phased out by end 2017.

Rent a Room Relief Scheme from Jan ‘15

• Tax-free income where owner occupier
• Maximum is €12,000 per annum including meals, laundry etc.
• Must still be declared to Revenue.

Earning more than €5,000

• utside of PAYE Income

If you earn more than €5,000 of income from any source outside the PAYE system you are

• bligated to file a return annually.

If you don’t file a return, penalties and late fees apply.

Other Income

Rental Income

Income - Expenses = Taxable Profits

Example of allowable expenses

• Mortgage interest (80%)
• Insurance
• Mortgage protection
• Management Fees
• Letting Fees
• Repairs & Maintenance
• Advertising
• Accountancy fees
• Painting & Decorating
• PRTB
• Utility bills
• Wear & Tear on Fixtures & Fittings.

Rental Income 2016

Taxpayer’s View Revenue’s View Monthly Rental Income €1,000 €1,000 Mortgage repayment / interest (€1,200) (€720)* Profit / (Loss) (€200) €280

* Assuming 80% of repayment is interest, restricted to 75% allowable (2016).

Other Income

• Landlord
• Self Employment
• Deposit Interest where DIRT paid
• Foreign Income
• Irish Dividends where 20% tax deducted.

Pay Related Social Insurance (PRSI)

From 1st Jan ‘13, the first €127 is no longer exempt.

• Class D (entered public sector pre 1st April 1995) @ 0.90%
• Class A (entered public sector post 1st April 1995) @ 4%
• Class M (Occupational Pension) @ 0%

Exemptions & Reliefs: All income is exempt from PRSI from age 66.

Universal Social Charge (USC)

Tax payable on gross income at the following rates from Jan ’16:

• .5% - on the first €12,012
• 2.5% - on the next €6,760
• 5% - on the next €51,272
• USC rate of 8% for incomes in excess of €70,044
• Non PAYE income >€100,000 = 3% Surcharge

Universal Social Charge (USC)

Current exemptions & Reliefs:

• Department of Social Protection income
• Total income less than €13,000
• Over 70 and salary is less than €60,000 per annum:

USC is capped at 2.5%

• Under 70, if salary is less than €60,000 and you hold

a full medical card: USC is capped at 2.5% .

Remind me why we should file regular tax returns?

Age Considerations 20 30 40 50

Multiple Jobs, e.g. Subbing Rent Relief Mortgage Relief AVC’s Tuition Fees Pension Contributions Sharing Credits Parent Nursing Home Fees Last Minute AVC’s CAT/CGT

70 55 60 65 66

Tuition Fees Parent Nursing Home Fees 1st Spouse Retirement 2nd Spouse Retirement DIRT Refund State Pension PRSI Exemption Age Credit Cap on USC Last Minute AVC’s Inheritance Planning CAT/CGT ARF Distributions

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Age Considerations

Organising Your Affairs

 Request & review your Tax Credit Certificates.  Ensure correct allocation of Standard Rate Band between spouses.  Notify amendments to Inspector.  File Tax Returns annually.  Review previous Tax years.  Make sure you claim for any S & C/training & temporary/marriage gratuity interest and other superannuation deductions.

***Seek professional advice***

Thank You.

If you need any help with your tax affairs we are available

• n (01) 408 4106.

Any Questions?

Midas is a tax based service and not a regulated financial product. Cornmarket Retail Trading Ltd. is a wholly-owned subsidiary of Cornmarket Group Financial Services Ltd. Telephone calls may be recorded for quality control and training purposes.