Earlier today, I had a conversation with two friends, an accountant, and an owner-manager. The owner-manager commented on the rush of the tax season being over for this year. We got to talk about how some clients lose money through their actions or inactions. I think it would be useful to post some of the learning points about the tax season here in the hope that others can learn from them
Leaving things until it’s too late
This is a problem with a few clients. We manage to get the tax return in but we don’t have the time to do a proper review of all the numbers. In some cases, we may not claim tax credits or reliefs because the client has left themselves with not enough time to pull out the relevant information. In one case, the client would have made provision for a pension payment and minimised their tax bill had they realised earlier what the final tax situation would be.
Not claiming all tax credits
There are a couple of tax credits that not everyone fully avails of. The main one here is medical expenses. The relief is worth 20% of the value of the medical expenses incurred, but not reimbursed elsewhere. The client just needs to make sure they get and retain the receipt. I recommend that clients pay by laser or credit card, if possible, so the payment is recorded on a bank/cc statement and is readily available.
People in employment not claiming all occupation specific tax credits
Often, a self-employed person is married to an employed person, and the partner’s employment earnings have to be returned on the self-employed person’s tax return. We have found that not all employees are aware of and claim all of their tax credits. For example, certain occupations such as nurses, teachers, college lecturers have occupation specific tax credits. These are often negotiated with the tax office by a trade union and are available to all persons carrying out the specific occupation. An up-to-date list can be found here http://www.revenue.ie/en/tax/it/leaflets/flat-rate-expenses.xls. For example, a nurse who is obliged to supply and launder his/her own uniform can claim € 733 as deductible expenses – at 20% this is worth € 146 per annum.
Failing to keep your tax credit allocations up to date.
We have seen situations where a client had allocated some of his tax credits to another part-time employment which he had since left. However he did not tell the tax office, and they kept allocating tax credits to that employment. The effect of this is that he was not getting those tax credits. We discovered this after four years and he got a four figure rebate. However, if it had gone over 4 years he would have lost his ability to claim the credit.
As always, if you have questions or comments feel free to email jim(at)accountsplus(dot)ie.