Tax is payable on income received.
It is calculated under a set of procedures established under the Taxation Acts.
An annual a Tax Certificate is issued by the Inspector of Taxes. This shows your TAX CREDITS for the year and the equivalent weekly or monthly amount which when subtracted from your gross income establishes your net income liable to income tax.
Tax Credits must be used within the year to which they apply.
The Rate of Tax Credits for 2014 is:
Single Person €1,650
Married Couple €3,300
Widowed €2,190
Single Person Child Carer €1,650
There are also additional credits
PAYE Credit (per individual) €1,650
Aged Tax Credit (per individual) € 245
Incapacitated Child €3,300
Home Carer’s Tax Credit € 810
Dependant Relative € 70
Single Person Child Carer Credit is provided to a widowed or single person who is the principal carer of a child under 18 years of age or who is permanently incapacitated or who is in fulltime education.
Home Carer’s Allowance is available on application to a spouse who cares in the home for an aged or disabled person or a child who is eligible for Child Benefit. The home carer may have an earned income of up to €5,080 and receive the full Tax Credit with a reducing Credit allowed on income up to €6,620. Also income derived from childminding up to €15,000 is permitted with no reduction in the allowance.
Dependant Relative Credit is available on application to those who support a widowed mother or incapacitated relative whose income does not exceed the contributory OAP.
Special Credits are provided to a WIDOWED person with dependant child/ren in each of the 5 subsequent Tax years in which they were widowed. The amounts are in year one €3,600, reducing each year: €3,150, €2,200, €1,800.
Home Help Tax Credit of up to €50,000 may be deducted from the gross taxable income when a person is employed to assist with an Incapacitated Person.
Exemption from income Tax for those aged 65 or over if their gross income from all sources is below €18,000 for a single person or €36,000 for a married couple.
Interest Relief on Domestic Mortgage does not apply to loans taken after January 2013.
Extra TAX CREDITS
Medical Expenses
All non reimbursed medical expenses, including Maternity care, Speech Therapy and Psychological Assessment for children and Nursing Home costs. These Credits may also be claimed for any incapacitated or elderly person or close family relative.
Health Insurance
Tax Relief on up to €1,000 per adult and €500 per child is provided and is administered by the Health Insurance provider.
College Fees
Each student is provided with a Tax Credit of up to €7,000 for full or part-time undergraduate or postgraduate accredited courses in Ireland. The first €2,750 of each claim is disregarded.
Allowance of fees up to €1,270 per course for foreign language or ICT courses (approved by Solas)
Rent Allowance
Rent paid to Private Landlords is to be phased out by 2017. Only tenants renting before December 7th 2020 still qualify for the allowance.
A Single person may claim up to €880, married/widowed up to €1,600. Those aged 55 or over may claim double allowance.
Pension Contributions
Pension contributions are Tax deductable on % of income up to €115,000 and are scaled according to the age of the contributor.
Under age 30 the 15% is allowed. This % increases to 40% for those aged 60 or over is 15%.
Other Charges:
Pay Related Social Insurance (PRSI) is charged @ 4% on gross income for all workers and self employed between the ages of 16 and 66.Workers earning less than €352 per week are exempt while the self employed must make a minimum contribution of €500 per annum. This charge applies also to all unearned income of persons who are required to make a tax return. Insignificant sums such as Bank, Credit Union or Post Office interest is not affected.
Universal Social Charge
USC applies to gross income from whatever source (excluding Social Welfare Benefits)
It is charged @ 2% up to €10,036 (€193 per week)
4% on the next €5,979 (next €115 per week)
7% on all remaining income
An exemption for those earning under €10,036 (€193 per week) applies.
Those who are self-employed pay 10% on income over €100,000. Persons aged 70 or over or those who hole a full medical card only pay 7% on income over €60,000.
Dirt tax
A retention tax of 41% applies to interest earned on Credit Union, investment and ordinary deposit accounts. Persons aged 65 or over and those permanently incapacitated, can if their total income is below the tax threshold may advise the relevant institution and receive the interest payment without the DIRT deduction.