We've got your ultimate guide to claiming tax as a student, courtesy of Irish Tax Rebates.
When you’ve been in business for over 20 years like we have, you see a lot of trends emerging. One of the most alarming that we’ve discovered, is how few students and graduates in Ireland realise that they may have overpaid tax and be eligible for getting some of that tax back. From emergency tax and relief on tuition, to tuition credits and relief on medical fees, we’ve put together a complete guide to all of the deductions that students like you can avail of and how to go about claiming tax back.
Starting Your First Job
Once you start your first job, you usually start paying tax from your first pay day. The system works on a cumulative basis. If you have been busy studying and have not worked for a portion of the year, your tax credits from the whole year can all be used against the income you earn during the portion of the year you begin work. So, even if you only start work in the 22nd week of the year, you will have 22 weeks of unused credits to offset against your tax liability. Or put another way, if you are studying until May and start work in June, you can use the tax credits from January to May for the remainder of the year.
Once you can provide evidence (receipts or other documentation) of incurring the expenses over the last 4 years, there are a number of common medical and dental expenses that are eligible for tax relief at the standard rate of 20%. As a student, you typically will not be earning enough to need to claim these back, however if your parents are paying your medical bills, or if you are working after graduation, you may claim back 4 years of tax relief on any of the following:
· Doctors and consultants fees relating to visits or treatment in a hospital
· Prescription drugs and medicines supplied by a pharmacist
· Consumable products for people like coeliacs or diabetics who follow specific diets
· X-Rays or MRI Scans carried out on the advice of a doctor or medical practitioner
· Speech & language therapy for a dependent child carried out by a qualified therapist
· Physiotherapy including treatments by a chiropractor, osteopath and bonesetter
· Acupuncture treatment carried out by a person who is a qualified practitioner
· Maternity care including private hospital fees
· IVF fees and treatment
· Ambulance transport and travel
· Kidney dialysis treatment and electricity, travel, telephone, laundry and appliances
· Optical treatments with the exception of eye sight testing, glasses and contacts
· Surgical, dental or nursing appliances such as glucometer machines, hearing aids, orthopaedic beds and chairs, wheelchairs or wheelchair lifts, false eyes and wigs.
· Dental expenses including crowns, veneers, tip replacing, posts, inlays, root canal, periodontal and orthodontic treatment, surgical extraction of impacted wisdom teeth (if undertaken in a hospital) and bridgework.
When you start a new job, your employer gives you a temporary tax credit until they receive the sufficient information required for you to benefit from your full scope of tax credits. To be on the safe side, the rate they temporarily give you is quite high – 40%. As a result, your pay packet may contain a lot less than it should. In order to avoid emergency taxation, your employer must receive an up-to-date P45 from your previous employer. Unfortunately, your previous employer may not be too quick about doing this, in which case you will need to apply for a Certificate of Tax Credits and Standard Rate Cut-Off Point by completing Form 12A and sending it off to Revenue.
Luckily, even if you’re emergency taxed, you can claim tax back. To do this, you need to file a claim for a P21 Balancing Statement at the end of the tax year, which you can do by filling out eForm12. Remember it is not enough to just request a P21 statement, as this will only give you a broad view, to make sure you are getting your full tax back, be sure to investigate other expenses you can claim back.
You can claim tax relief - at the standard rate of 20% - on cost associated with tuition fees, including the Student Contribution fee. This applies to certain 3rd level courses including approved undergraduate courses of at least 2 years in duration, as well as approved postgraduate courses of at least 1 academic year in duration once you already hold a primary degree. While this tax relief is applicable per course, per student, per college year, if your parents paid and claimed tax relief on these already, you are not eligible to claim the tax relief again. However, you can claim tax back up to four years after you start.
The more you know, the bigger your tax back claim can be
To ensure you’re not overpaying tax and being left unfairly short of cash, it is crucial that you familiarise yourself with the available tax credits in Ireland. To help you do that, our experts at IrishTaxRebates.ie are here to help you in any way they can.