Top 10 Tips for Preparing for Income Tax Pay & File Deadline
While the income tax deadline of 31 October might seem a while away at this stage, we find that with catching up after the summer holidays and back to school, the deadline creeps up very quickly on people each year. Some early preparation can help take some of the pressure out of an otherwise stressful task. Here are some tips to help put you in pole position when it comes to deadline time:
- Check ROS & Your Obligations
If you have a tax agent, they will be linked to you on ROS.
If you file your own return, make sure that your ROS Digital Certificate has not expired and that you remember your password to access it.
Remember that your certificate is linked to your computer so if you changed your computer during the year it is particularly important to check your certificate.
- Avoid Penalties
File on time to avoid penalties for late filing.
To avail of the extended pay and file online deadline – i.e. 16 November 2022 for 2021 returns – the taxpayer must pay the balance of income tax due for 2021 and the appropriate preliminary tax for 2022 on line by the extended deadline. If one does not file by 31 October and then realises they do not have sufficient funds to make the payments by the extension date, penalties for late filing of returns – as well as interest on late payments – can be applied.
- Check your entitlements to tax credits
The most commonly overlooked credits include the home carers credit, incapacitated child credit and one parent family credit.
- Medical Expenses
If you have qualifying medical expenses, gather the information and include on your return. Remember that a Form Med2 is required in respect of claims relating to non-routine dental treatment.
If you have a particular pharmacy that you use for medication they may have a copy of all your receipts for the year on their system. So they may be able to retrieve any mislaid receipts.
- Consider what costs are deductible
This is relevant if you are self-employed or have rental income or if you are an employee. Taking a deduction for all allowable costs obviously reduces your taxable income but claiming costs that are not allowable can be expensive in terms of interest and penalties if the error subsequently comes to light.
- Pension / Permanent Health Insurance
Consider if there is scope to make a pension top up by the deadline date in respect of which relief can be claimed on your 2021 tax return.
Contributions to PHI policies qualify for tax relief but are often overlooked.
If you made an investment in 2021 check that you have received the relevant certificate to claim relief.
If you made an investment in 2017 check if you are entitled to claim the remaining 25% of the relief and, if so, obtain the appropriate certificate to claim.
- Disclose income and gains from all relevant sources
It sounds obvious but very often income from some sources get overlooked, e.g. deposit interest income, dividends, as does disclosure of disposals for Capital Gains Tax purposes.
- Local Property Tax (LPT)
Check that your LPT affairs are up to date. If not, an LPT based surcharge may be applied to your tax return.
- Consider if you need a tax agent
Not always necessary but sometimes not having one can be a false economy. Beware of “bar stool” tax advice. Tax treatments can be based on very specific circumstances and what might be good for the goose might not be good for gander!
Author: Derek Henry, Partner – Head of Tax, BDO