31st October – potentially the scariest date of the year. No, we’re not referring to Halloween, but the pay and file deadline for self-assessed taxpayers. Here are Horizon’s top tips to ensure that things go smoothly for you this tax season:
1. Do I need to file a tax return?
It’s not just those who are self employed who must file a tax return. Any income you receive that isn’t taxed under the pay-as-you-earn (PAYE) system will need to be returned e.g. rental income, income from abroad, profits from share options.
2. Make sure you meet the deadline.
A late return can attract a surcharge of up to 10% of your final tax liability so don’t delay. Deadline for submitting paper returns is 31st October. Filing your return using Revenue’s online system gives you an extra 2 weeks, with the deadline extended to 15th November. See www.ros.ie for more details on how to register for the online service.
3. Don’t forget your preliminary tax
As well as the balance of tax for 2010, Preliminary Tax for 2011 is also now due. The issue of preliminary tax is trickier this year, with the introduction of the new Universal Social Charge and restriction on certain types of tax relief claims to consider. Take a look at the Revenue’s guide to self assessment at www.revenue.ie/en/tax/it/leaflets/it10.html for further details on calculation of preliminary tax and to help avoid an underpayment of tax.
4. Consider your pension contribution
This is your last opportunity to make a pension contribution which can be offset against your tax liability for 2010 and used to reduce your tax bill. If you are in a position to do so, it’s worth considering making a contribution to your pension this year as there are concerns that tax relief on such contributions is set to reduce. Currently tax relief on pension contributions is granted at your marginal rate, subject to caps based on your earned income and age. Contact us here at Horizon Financial for more details on pension tax relief limits.
5. Claim all your entitlements
Make sure you are availing of all the tax reliefs and credits you are entitled to. Some of the more common ones to consider are:
- Health Expenses
- Rent Relief
- Refuse Charges
- Third Level Tuition Fees
- Age Credit
- Home Carer’s Credit
More details on reliefs and credits can be found at: http://www.revenue.ie/en/tax/it/leaflets/it1.html
6. Don’t ignore your tax liabilities
If you are struggling financially, don’t ignore the situation. File your return on time and try to stay tax compliant. If you find yourself in financial difficulty, make contact with the Revenue Commissioners to explain your situation. They look at such matters on a case by case basis and you may be able to agree an instalment arrangement with them.
If you are in doubt about any aspect of your tax situation, make sure to contact a professional. Speak to your accountant or tax advisor, who can guide you through every step of the pay and file process and make 31st October a little less scary this year.