Taxing Matters

YOU MIGHT NOT HAVE TO PAY DIRT TAX!

It is said, that there are two inevitable consequences of being born. The first is death, hopefully after a long and fulfilled life. The second is paying tax, but at least you can do something about that by ensuring legally you do not pay more than you have to.

If you have savings in a bank, credit union, building society or other financial institution, you may well be paying Deposit Investment Retention Tax (DIRT) on any interest earned. What is not so well known is that, depending on meeting certain criteria, people over 65 may not have to, and those under 65 who are severely incapacitated may well be in the same boat.

The Revenue Commissioners’ website states “DIRT is deducted from a customer’s deposit interest regardless of whether or not the customer is actually liable to tax. At the end of the year some account holders, provided they meet certain conditions, are entitled to claim a refund from Revenue of any DIRT deducted during the year”

Additionally in 2007, the Finance Act allowed interest to be paid gross, i.e. without the deduction of DIRT if you met certain conditions. If you satisfy these conditions, you can apply to the Revenue, via the financial institution to have the interest paid gross.

What are these conditions? Firstly, if under 65, you have to complete a declaration form stating that you or your spouse, if married meets the following:-

That you or your spouse (as appropriate) are “permanently incapacitated by physical or mental infirmity from maintaining yourself”, and:
That “you would be entitled to a refund of the entire amount of DIRT deducted by a Financial Institution”

Then comes the sting in the form of a means test – your total income in 2008 must not exceed €19,000 for a single person or €38,000 for a married couple. The exemption limits may be increased, if you have dependent children. Further details can be obtained by ringing the Revenue Commission line in LoCall 1890 306 706, open 24 hours a day.

If you are over 65, the incapacity test does not apply but the means tested figure does.

Alternatively click here and you will be taken to the Revenue Commission website where you can download more information and forms.

Look carefully at any saving accounts you have, most financial institutions will deduct DIRT regardless as they say they do not know your age or medical condition. If you are over 65, or permanently incapacitated, go and talk to them, ring the Revenue Commission, fill out the forms, and if appropriate apply for any rebate of tax that you might be due.

It is not charity, it is your money!

INCOME TAX RETURN - Medical Expenses

If you are filing in your tax return for 2007 onwards, or just claiming for a rebate for allowable medical expenses remember that you no longer have to deduct €125 for a single person or €250 for a couple or family from the total. All medical expenses within the defiined categories are fully tax deductable. For more information and to download the Med1 Form for general medical expenses and Med2 for dental expenses click here for the Revenue Commissioners website. (Thanks to member Michael Keegan for this useful bit of information.)

Also remember that if you have not reclaim rebates or allowances for previous years you can only go back 4 (four) years.