Tax isn’t a very exciting topic for most people but it does become exciting when you consider how you might reduce your tax bill and put money back into your own pocket simply by making a few small adjustments. This year the income tax return deadline for 2020 is the 31st of October 2024. If you file and pay your taxes online through ROS, the deadline is November 14th, 2024.
Here we’ve compiled 5 tips on how you can reduce your 2020 tax bill …
Tip 1 – Making a contribution to your Pension is a great way to reduce your Tax bill
Pay yourself rather than Revenue (limits apply). It is by far the most efficient of investments. If you are in the high tax bracket, you are essentially earning 40% interest immediately when you contribute. With a contribution of €600 of your net income, you will get €1,000 in your pension fund. Now is the time to consider setting up a pension if you haven’t already done so.
Tip 2 – Tax Credits
Claim all your credits such as medical costs (from prescriptions to coeliac specialist foods), home carer allowance, college tuition fees, etc. A 4-year lookback tax credit review could be very worthwhile! Also, don’t forget to Maximise Expenses. For Residential landlords, Capital Allowances are frequently well understated (get them valued) and interest relief has now increased to 100%.
Tip 3 – Be Tax-efficient
Use all lower rate tax bands and tax-free allowances available to you and your spouse. Employing your spouse if they have no other source of income will maximise the amount of income that can be earned at 20% (€70,600 v’s €44,300). Opportunities also exist for very generous pension funding; no age limits or earnings cap exist for employee pension contributions.
Tip 4 – PAYE earners with less than €5,000 of additional taxable income can file a Form 12
PAYE earners with less than €5,000 of additional taxable income may be able to file a FORM 12 rather than a FORM 11. This avoids a 4% PRSI charge and your tax liability can be collected by reducing future tax credits.
Tip 5 – Ensure your Insurance Policies are TAX effective
This is a big one! In our experience working with professionals, too often we see that the way people’s insurances have been structured is absolutely poor at best – when it comes to both tax efficiency and estate planning. Our job is to provide you with quality advice on tax-effective structures and make sure your assets go to the right people at the right time should a claim arise. This way you will be able to claim all your legitimate tax deductions and also have peace of mind as well. Isn’t that what your insurance is supposed to do…?
Click here to download your 60 Second Pre-Tax Financial Health Check