Income Tax Guideline 2010 for Individuals – What you can claim for to minimise your tax liability

By Louise Carey, 6th June 2010.

The 31st October income tax deadline is fast approaching.  This date is the deadline for submitting your Income Tax Return for 2009 and for paying the balance of your 2009 income tax liability and your preliminary tax for 2010.  Preliminary tax should be either, 90% of the ultimate liability for the period, 100% of the liability for the preceding period or if you pay by direct debit 105% of the liability for the pre-preceding period.  You are liable to interest from the preliminary tax date if your payment is insufficient.

Tax is payable at the 20% rate for an individual’s first €36,400, a single parent’s first €40,400, €45,500 for a married couple with one income, €45,500 for a married couple with a maximum increase of €27,400.

In addition to the standard tax credits of €1,830 for a single person and €3,660 for a married couple.  A person employed under the PAYE tax system is entitled to a PAYE tax credit of €1,830.  Home carers tax credit of €900 can be claimed by married person who are jointly assessed and where one spouse works at home to care for children, the aged or incapacitated persons.  A tax credit is also claimable by an individual who employs a person to take care of a family member who is totally incapacitated by old age or infirmity.  The maximum allowance for 2009 is €50,000 and relief is granted at the marginal rate.

An aged tax credit of €325 for a single/widowed person and €650 for a married person, is claimable by a person where he or his spouse is at least 65 years of age during the year of assessment.  A person over 65 has an increased exemption limit, (i.e. the amount under which she/he is exemption from paying tax), of €20,000.

Relief is available for medical expenses at the marginal rate in respect of certain medical incurred by an individual on behalf of him/herself, a relative or any other person over 65 years of age or permanently incapacitated (mental or physical).

Other tax credits available are Widowed Parent, €4,000 first year after bereavement, €3,500 second year after bereavement, €2,500 fourth year after bereavement, €2,000 fifth year after bereavement, other years €600.  Incapacitated child tax credit is €3,660, dependent relative €80, blind person €1,830.  Health insurance premiums tax credits ranges from €200 to €1,250 depending on age from 50 upwards.

Rent paid to a maximum of €2,000 for a single person and €4,000 for a married couple aged under 55 years, and €4,000 and €8,000 respectively aged over 55 years of age.

A tax credit is allowed in respect of service charges, which are paid in full and on time by the person liable for them or by another person who resides on the premises to which the service charge relates.

Tax relief is available for pensions contributions for a percentage of 15% to 40% of earning depending on age.  Pension contributions to be effective must be paid by the filing deadline.

Tax relief is also available in respect of tuition fees paid by an individual in respect of Third Level education in an approved college in respect of an approved course

If you are self-employed you are liable to PRSI at 3%, with the minimum contribution being €253.  If you earn less than €500 per week you will not have to pay the health levy.  If you earn greater than €500 per week then you income is liable to the health levy at 4%.  If you earn more that €1,443 you are liable to the health levy at a rate of 5%.

The income levy is payable on gross income from all sources before any tax reliefs, capital allowances, losses or pension contributions. From 1 May 2009 2%: rate for income up to €75,036, a rate of 4%: for income between €75,037 and €174,980, and a rate of 6%: for income in excess of €174,980.  For an individual whose income for a year does not exceed €15,028, or an individuals aged 65 or over whose annual income does not exceed €20,000, or a full medical card holders there is an exemption from the health levy.  Social welfare payments are also excluded from the income levy

The scrapage scheme provides for VRT relief of up to €1,500 when a new passenger car with CO2 emissions of not more than 140g/km (i.e. CO2 band A or B) is purchased and registered and another passenger car, over ten years old is scrapped. The scheme will run from 1 January 2010 to 31 December 2010.

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