Let’s begin by knowing if all our readers are aware about what exactly a tax credit is. For those who don’t, hang on you will know it all. We are going to explain the concept in layman’s language.  

So what exactly is a tax credit? As a taxpayer, the amount of money you can deduct from your taxes, which you owe to the government. A tax credit is preferred over a tax deduction because it is an actual reduction on the tax due and not just the amount of taxable income. Clear enough? 

Today, we are going to discuss the tax credits in Ireland 2021. Each Ireland citizen is entitled to a tax credit. This amount is non refundable. However, an unused tax credit, within a month, gets carried forward to a later period but in the same tax year.

How Does Tax Credit In Ireland Works?

Each resident is authorized for a personal tax credit. This personal tax credit is applicable for married, widowed and single people.

A few tax credits, which as a resident in Ireland, you can be entitled to claim are- employee tax credit, widowed person tax credit, blind persons tax credit, age tax credit etc.

We will point out the important types of tax credits in Ireland in brief.

  • Age tax credit

You are accountable to pay income tax the normal way even if you are more than 65 years old. But there is a beneficial tax credit for the older age group. In few instances, they may also be able to claim the deposit interest retention tax they have paid.

  • Employee tax credit

In case of employee tax credit, the amount contributed to the pension is accountable for tax credit at the highest rate.

  • One parent

In a situation of being ‘one-parent’, the resident can responsibly claim the single person child credit and the personal tax credit. The citizen can also experience an increased standard rate band. What does this mean exactly? The one-parent can earn more before they even begin to pay the high tax rate.

  • Divorce/Separation tax credit

In the case of a divorce or separation between a couple or a dissolvement in a civil partnership, the divorce/separation tax credit will imply. The couple has to contact the revenue officer once the separation is done. The tax adjustments in that year and the following years will be done then.

  • Medical damage

In case the resident pays medical expenses which are not covered by the insurance sector (state or private), then the person is accountable to claim tax credit on those expenses. The person can claim tax relief on health expenses only if he or she is a taxpayer. Tax credit is also applicable in case of any premium amount paid on health insurance and long term care insurance. The tax credit amount will be permitted by the insurance company.

  • Education tax relief

Tax credit is applicable on the fees paid for third-level courses, which means on- undergraduate courses, postgraduate courses and Information technology or foreign language courses. However, you cannot claim the tax relief on any examination or administration fees.

  • Housing tax credit

A resident can claim for tax relief on a few housing expenses. This is constructed especially for the first-time home buyers so that they have all the convenience to gather the deposit amount.

Every taxpayer in Ireland is accountable for a tax credit. However, they are different for married and unmarried individuals. Let’s have a look

Policy For Married Tax Credit In Ireland

Incase of a couple being married, both of them are treated as single people for the purpose of tax payments. If the tax paid as two single people is more than the tax which would be paid as a married couple, then the couple can claim the difference as a tax credit. They are accountable to this refund amount from the date of marriage and after the following 31st December. In case the couple got married in the year 2020, then the tax refund will be calculated after the 31st of December 2020.

The married tax credit Ireland policy works only in the case when the couple gets taxed at different rates and one partner could be benefitted by the other partner’s unused tax credit. The married couple has to notify the tax office about the date of marriage.

Civil partners are also accountable for the same rights just like the married couples. However, this is applicable only for the civil partners who got themselves registered before the commencement of the Marriage Act 2015.

Unmarried/Single Tax Credits In Ireland Policy

The unmarried tax credit Ireland policy works in case you are unmarried, separated or divorced. People who were a part of civil partnership can also claim the single tax credit policy. This structure will also work if you would like separate evaluation as a married couple. 

Tax Credits Policy For Widowed Person 

A person will be accountable for this credit if they are widowed or a surviving civil partner. The amount depends on two factors. Number on being- When the spouse or the partner of the widowed person died. Number two being- Whether the widowed person has any dependent children. In the year of bereavement, the widowed person will receive a high amount of tax credit. The amount will be the same as the partner’s credit amount. In case the widowed person has any dependent children, he or she can claim the tax credit amount for five years. This begins from the year the civil partner or spouse dies.

For the year 2021, Let’s tell you about the structure in brief.

  • For a single person – €1,650
  • For a civil partner or a married person – €3,300
  • For a surviving partner or a widowed person (with dependent children) – €1,650
  • For a surviving partner or a widowed person  (without dependent children) – €2,190
  • For a widowed person or surviving partner (on the year of death) –  €3,300
  • For a widowed person (1st year of death) – €3,600
  • For a widowed person (2nd year of death) –  €3,150
  • For a widowed person (3rd year of death) –  €2,700
  • For a widowed person (4th year of death) –  €2,250
  • For a widowed person (5th year of death) –  €1,800

Looking to claim back Tax?

Thousands of people living in Ireland have been helped every year by Irish tax Rebates to claim back the tax amount. The average tax rebate amount is €1,100. So apply online and begin your process today.

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