Filing tax returns can be a difficult process to understand, whether it’s your first time or indeed your tenth time to do so. It’s easy to become confused with so many unfamiliar terms to comprehend. You need not fret however as expert tax return help is available!
To make things easier for you, our team at Tax Return Plus, Ireland’s leading tax returns service, has put together a quick guide to explain 10 key terms you’re likely to encounter when filing tax returns.
As and from 2013, all “chargeable” persons (including landlords), must self assess when filing tax returns. This is where you make your own assessment as regards to income tax, USC, PRSI, corporation tax or capital gains tax. In previous years, Revenue would assess you on the basis of the information you entered in your return of income. Now it’s up to you to assess all areas of taxation.
“Chargeable person” is a term that confuses many. The term is used in place of “self-employed” persons as tax returns are also required to be completed by landlords and those who are liable for Capital Gains Tax. Essentially a chargeable person is someone who is liable to pay tax on income but who is not in receipt of PAYE income only or other income that is being taxed through the PAYE system at source.
You are a chargeable person if you have a PAYE source of income and either net assessable non-PAYE income of €5,000 or more in a year or a total gross income from non-PAYE sources of €50,000 or more in a year.
The “Pay and File” system allows you to file your tax return and pay the balance of any outstanding tax for the previous year at the same time.The Pay and File system provides the facility for you, on a single due date known as the specified return date – October 31st to:
• Pay your Preliminary Tax for the current year
• File your tax return and self-assessment for the previous tax year
• Pay any balance on tax due for the previous year
ROS refers to the Revenue Online Service. You can both file your tax return and pay your tax online using the ROS system. The service facilitates the electronic filing and payment of over 21 different taxes and duties for chargeable persons.
Preliminary Tax is your estimate of tax and any other related charges that are due to be paid by you for a particular tax year. It must be paid by October 31st in the tax year in question. In calculating your estimated Preliminary Tax payment, you should ensure that you also cover PRSI and the Universal Social Charge if applicable as well as Income Tax.
Capital Gains Tax
Capital Gains Tax (CGT) is a tax payable on gains made on the disposal of particular assets. The “disposal” of assets liable for CGT refers not only to asset sales but also to assets which may have been gifted or donated. Typical “chargeable assets” which are liable to CGT include land, houses and business shares, however many other forms of property may also be considered.
Single Debit Authority
Single Debit Authority enables you to make one-off tax return payments directly from your bank account by including your bank details and the debit amount on payslips attached to:
1. Form 11 Tax Return Forms and Self-Assessments
2. Form 11S Tax Return Forms and Self-Assessments
Note that any payments filed through Single Debit Authority, receive credit on the day of payment.
A Revenue Audit is an examination of tax returns and records submitted. A Revenue officer will check to ensure that all profits, income and chargeable gains have been correctly calculated, tax credits have been applied and that no important chargeable information is missing.
Your tax returns will normally be accepted by Revenue and processed without in-depth auditing. However, your tax return may be selected for audit, in which case your records and returns will be thoroughly examined. A number of taxpayers are selected for audit every year – often this is a random selection.
If you are a chargeable person, you can make your income tax return and self-assess your tax liability by filling a paper Form 11 and sending it to Revenue or submitting a digital version via ROS or alternatively use a shorter version of the form (11E) which is an extract of the main personal Tax Return form. The 34-page Form 11 requests information such as:
• Personal details e.g. PPS number, marital status, residence status
• Income details including extracts from accounts
• Rental income details
• Income from Irish employment, offices, pensions, social welfare etc.
• Foreign income
• Income from fees, covenants, distributions etc.
• Exempt income
• Annual payments, charges and interest paid
• Claim for tax credits, allowances, reliefs and health expenses
• Limitations on use of reliefs
• Capital acquisitions
• Capital gains
• Chargeable assets acquired
• Property based incentives
The Form 12 tax form is for people whose main form of income is through the PAYE system e.g. a job or a pension, or a non-proprietary company director who pays their income through the PAYE system. If you wish to settle tax on non-PAYE income e.g. rental income or income from savings where the assessable amount is less than €3,174, you will also have to file a Form 12.
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