Here we go again… Its that time of year when we must complete our tax returns, and everyone is looking for ways to legitimately reduce the amount that must be paid to revenue. Weve set out below a few areas for you to consider that will either reduce your tax bill or will give you the opportunity to avail of a valuable tax break. However, we strongly advise that you get professional advice to ensure that you meet all terms and conditions of the various tax breaks, and to optimise your outcomes.
A pension contribution
This is probably the best-known and most popular way to reduce your tax bill. The government encourages all of us to save for our retirement by providing generous tax breaks when saving specifically for retirement. If you make a payment before the tax deadline, it may qualify for tax relief against your 2022 tax bill. Your contributions qualify for marginal (higher) rate tax relief within certain limits, as well as tax free growth as the fund builds up in the future. This needs careful planning, and we would be delighted to help you get the optimal retirement plan in place.
Working from home relief
When working from home, you may be eligible for tax relief on some expenses like light, heat, telephone and broadband.
If your employer does not pay you an allowance for your expenses, you can claim relief when completing your tax return. You can claim remote working relief for 30% of the cost of heating, electricity and broadband for the days spent working from home.
Medical expenses
Medical expenses can really rack up for a family over the course of a year. GP & consultant visits, prescriptions and trips to the physio, along with certain dental and other health related expenses all qualify for tax relief. You can claim standard rate relief (20%) for medical expenses that you pay – typically your own, your family’s and in some cases where you pay other people’s expenses. The process is pretty simple too – just keep those valuable receipts.
Bike to Work Scheme
Under the Bike to Work scheme, tax relief is available where your employer provides a bicycle and safety equipment for you, up to the value of €1,250. When you avail of the scheme to the limit of €1,250, the net cost to you (assuming 40% tax, 8% USC, 4% PRSI) will be €600. Electric bikes that require some assistance from the cyclist also qualify, up to an increased amount of €1,500. You don’t have to use the bike for work every day and can also qualify even if you are working from home.
There are numerous other tax reliefs and credits available for a range of different circumstances such as caring for people, tuition fees for 3rd level education or having a lodger in your home. It’s worth spending time carefully examining the form used to make your tax return, to ensure you’re not missing out on any valuable tax breaks.
Tax is a necessary evil – just make sure you’re not paying more than your fair share
Get in contact with us at info@ppsfinancial.ie
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