TAX CREDIT SYSTEM
- Under the Tax Credit system, Tax payable = Gross Tax Liability minus Tax Credits. Gross tax liability is calculated on your total income (after deduction of superannuation and permanent health benefit) by applying 20% to income up to your standard rate cut-off point and 40% on the remainder. The cut-off points in 2019 will be:
|Standard Rate Cut-off Income 2019||Weekly||12 Month Value|
|Single/Widowed||€ 678.85||€ 35,300|
|Single Person Child Carer||€ 755.77||€ 39,300|
|Married (one income)||€ 851.92||€ 44,300|
|Married (two incomes)||€1,357.69||€ 70,600|
- If you rent rooms in your own home for less than €14,000 gross, this will be exempt from income tax and USC, provided the tenant is not your own child, and the rent is not being paid by your employer to facilitate, for example, clients using the room in your home. Short term rentals are also excluded. If you rent a home, 100% of interest paid on a loan for the property is now deductible in calculating taxable income.
- If you care for up to 3 children in your home and receive less than €15,000, this income will be exempt from tax but a minimum €500 Social Insurance is payable. If you exceed these amounts, the exemption is lost and the whole lot is taxed. You must be registered as a self-employed person.
- Your Tax Certificate will show the annual value of all your Tax Credits and the equivalent weekly or monthly amount which are subtracted from your gross liability to yield the tax payable:
TAX CREDITS 2019
- Single Person €1,650
- Self-Employed €1,150
- Married Couple €3,300
- Age Tax Credit (per individual) €245
- Widowed (no children) €2,190
- Incapaciated Child €3,300
- Single Person Child Carer €1,650
- Home Carers Tax Credit €1,500
- PAYE Credit (per individual) €1,650
- Dependent Relaltive €70
- The Home Carer’s Tax Credit is available to a partner in a one-earner family who is caring in the home for a child who iseligible for Child Benefit, or for an aged or disabled person. You must apply for this allowance. The home carer is allowed to have up to €7,200 income of their own, thereafter the credit is reduced, reaching zero if income exceeds €9,400. Carer’s Allowance is not counted as income in this means test, nor is income from childminding under €15,000.
- Single Person Child Carer Credit applies to a single or widowed person if you are the principal carer of a child aged under 18, or over 18 if in full-time education, or permanently incapacitated.
- Dependent Relative Credit is claimable if you support a widowed mother or incapacitated relative whose income does not exceed the contributory OAP.
- A parent with dependent children who is widowed gets an additional tax credit in each of the 5 subsequent tax years of €3,600, €3,150, €2,700, €2,250 and €1,800 respectively.
- Tax credits which are unused are not refundable. They will be carried forward from week to week during a tax year, but if unusedafter the end of the tax year, they are lost.
- An Incapacitated Person, or one or more of their family, can get tax relief at their top rate of tax of up to €75,000 to employ a home carer, or pay an agency for such a service. Relief on Payments to Nursing Homes are also available at your top rate of tax.
THE FOLLOWING EXPENSES CARRY A 20% TAX CREDIT
All unreimbursed Health Care Expenses incurred at home or abroad and recommended by a registered professional for treatment or related to a pregnancy, for your own family, or for any individual. In cases of treatment abroad not available in Ireland or treatment of an Incapacitated child, certain other expenses can be claimed (travel/accommodation). A Psychological Assessment and Speech Therapy for children also qualifies. Routine Dental or Optical Care don’t qualify.
- Insurance to cover long-term care costs in the event of serious disability, and to cover non-routine dental costs.
- Mortgage Relief for those who purchased their homes before 31 December 2012 is being partially extended: 75% of existing relief in 2018, 50% in 2019 and 25% in 2020.
- College Fees (including Tuition Fee and Student Contribution) of up to €7,000 for each student for full or part-time undergraduate or postgraduate study in accredited courses. However, the first €3,000 of a claim is disregarded (i.e. for parents paying only the Student Contribution of €3,000 per student, relief only applies for the second and subsequent child in college).
- Course Fees between €315 and €1,270 per course for foreign language or ICT courses (approved by SOLAS).
- A Universal Social Charge applies in 2019 to gross income from whatever source (excluding only Social Welfare Payments) and without deduction of pension contributions as follows:
- 0.5% up to €12,012; 2% on the next €7,862; 4.5% on the next €50,170; 8% on the remainder
- An exemption applies to persons whose total income is under €13,000. The self-employed pay 11% on income over €100,000. Persons aged 70 or over and Medical Card holders whose aggregate income does not exceed €60,000 pay a maximum 2%.
- Pay Related Social Insurance (PRSI) applies at 4% to gross income (with no deduction for pension contributions) of workers and the self-employed aged 16-66. All workers are exempt from Social Insurance if they earn less than €352 per week. Between €352 and €424 tapered relief applies. The minimum contribution by a self-employed person is €500 per year.
- Pensions: A certain portion of gross earnings under €115,000 can be put into a pension tax free. It is up to 15% (under 30 years) rising in steps to 40% (60 years or over), allowable at your top rate of tax. However, a ceiling of €2 million applies to the total value of a person’s pension plan. Any benefit that accrues over that value will have a 40% retention charge, before ordinary tax is applied to the balance.
- DIRT Tax: A single retention tax of 35% applies to interest earned on ordinary deposit accounts, investment accounts and all Credit Union accounts. It is planned to reduce this to 33% by 2020. Persons who are 65 and over, or permanently incapacitated, can, if your total income is not sufficient to make you taxable, notify your bank and receive the interest without deduction of DIRT.
- Local Property Tax in 2019 is chargeable to the owner of a residential property at a rate of 0.18% of the market value on 1 May 2013 as fairly assessed by that owner (a higher 0.25% applies to the excess over €1 million). For 2019 the tax due under this calculation has been reduced by 15% in Dublin City and by 10% in Fingal.
- Capital Acquisition Tax: Gifts or inheritances bear a 33% tax on the market value of the assets received in excess of certain thresholds which vary according to your relationship with the giver – €320,000 (from 10 Oct 2018) for a son or daughter; €32,500 grandchild/brother/sister/niece/nephew/parent: €16,250 all others.