1. Deadline date.
Late filing will result in an automatic late filing surcharge of 5% of the tax liability if a return of income is filed within the first two months of the deadline and 10% of the tax liability if filed thereafter.
Please note for directors the surcharge is based on the income tax liability before any credit for PAYE tax paid by the director.
Revenue can also impose interest and penalties on the late payment of your income tax liability.
2. Trading via a private limited company.
The annual profits of a company are taxed at 12.5%. A self-employed individual could potentially be taxed at 52% that is income tax at 41%, PRSI at 4% and USC at 7%. Therefore it is imperative to determine (a) whether trading through a private limited company would be more cost effective for you and (b) what tax you can save.
3. Tax credits and standard rate bands.
If you are a director in a company and want to take the most tax efficient salary from your company then you should always consider maximising the salary you can take from the company at the 20% rate band. For the tax years 2013 and 2014 and for a single individual this is €32,800. Please note proprietary directors are not entitled to claim the PAYE tax credit.
4. Non domiciled taxpayers.
Non domiciled taxpayers need to be mindful of the income they are remitting to Ireland. Any income earned prior to becoming resident in Ireland should be kept in a separate bank account. The taxpayer can remit this to Ireland as capital and potentially avoid an income tax liability on same.
5. Time limit for claiming refunds.
If you believe you are due an income tax refund for prior years please note that claims for refunds must be made within 4 years of the end of the year to which the claim relates. Claims made after this time cannot be repaid.
6. Personal pension payments.
Additional pension payments can still be made up until 31 October and tax relief at 41% claimed for the tax year 2013. Relief is based on a percentage of your net relevant earnings and your age.
7. 2013 Medical and dental expenses.
Tax relief for medical expenditure incurred in 2013 such as doctor fees, consultancy fees can be claimed if not already reimbursed by your healthcare provider. A form Med 2 will need to be requested from your dentist before tax relief can be claimed on non routine dental treatment received.
8. Rental Expenses.
An area that is often overlooked by rental property owners is the personal cost incurred in dealing with tenants and collecting rents e.g. motor and travel, phone calls. In practice Revenue will allow some reasonable level of costs if they can be justified in your particular circumstances. For example if rent is paid by direct debit then it would be hard to justify a claim for personal expenses for dealing with the letting. If you have more than one rental property and have to collect weekly rents from tenants then a claim could be made for expenses incurred in doing so.
9. Loss relief.
Trading losses can be offset against other income in the current tax year. Please note the claim must be made within 2 years of the end of the year of assessment in which the loss is sustained. Otherwise trading losses are carried forward and offset against future trading profits indefinitely.
10. Expenses incurred.
All expenses which were incurred “wholly and exclusively” for business purposes should be claimed and a percentage should be claimed for expenses that were used for both private and business purposes. If in doubt check with your accountant.
11. Personal circumstances.
If for example you got married in 2013 please notify your accountant as soon as possible. He will prepare a year of marriage review which could potentially result in a tax refund for this year. Also discuss with him the benefits of opting to be jointly assessed for income tax purposes for later years.
12. Tax Credits and Allowance
There may be some allowances or credits that you are unaware of and that may apply to your personal circumstances.
You can review the list of tax credits and allowances on the Revenue Commissioners website http://www.revenue.ie/en/tax/it/credits/index.html.
If you are unsure about the tax treatment of certain income, or how to complete your income tax return please contact your accountant for professional guidance on same.