Tax Credits

Unlock potential savings with tax credits! Here’s how it works: your income is initially taxed at 20% for earnings up to €35,300. Any amount exceeding that is taxed at 40%. However, tax credits act as valuable discounts, lowering the actual tax you owe.

If you reside in Ireland, you automatically qualify for Personal Tax Credits. Plus, there’s more good news! You might also be eligible for additional tax credits tailored to your circumstances. Discover and claim what you deserve. Your money, your rights; let’s ensure you benefit fully.

Take Ciara’s case, for example. In 2020, her earnings were €30,000, staying under the 40% tax rate threshold. Thus, her income falls into the 20% tax bracket.

Here’s a simple breakdown:
€30,000 at 20% equals €6,600, which would be Ciara’s tax due before applying her tax credits.

Every taxpayer has a couple of aces up their sleeve – the Personal Tax Credit and the PAYE Tax Credit, each valued at €1,650. Subtracting these from Ciara’s initial tax gives us the following: €6,600 – €3,300 equals €3,300.

After leveraging her tax credits, Ciara has a tax bill of just €3,300 for the year. Your finances, too, could benefit from such clever calculations!

Consider Ryan’s situation. In 2020 he earned €45,000, surpassing the 40% tax threshold. This means a portion of his income is taxed at 20% while the remainder faces a 40% rate.

Here’s a simple breakdown:
Initial €35,300 at 20% amounts to €7,060.

The remaining €9,700, falling into the higher bracket, is taxed at 40%, resulting in €3,880.

Combine these, and Ryan’s preliminary tax comes to €10,940. But wait, Ryan has two tax credits in his pocket, summing up to €3,300. When we deduct this from his tax: €10,940 – €3,300 leads us to €7,640.

After applying his tax credits, Ryan’s total 2020 tax bill stands at €7,640. Proper understanding and application of credits can work wonders for your tax liability, just like Ryan’s!

Consider Claire, a hard-working single parent with a 2020 income of €28,000. Being below the tax threshold, her income gets a straightforward 20% tax rate. That’s €5,600.

Beyond the standard duo of tax credits, which add up to €3,300 (2 x €1,650), Claire has an added advantage. Due to her single-parent status, she benefits from the Single Parent Tax Credit (SPCC) worth an extra €1,650. This brings her total tax credits for the year to a significant €4,950.

Subtracting this from her original tax, we get: €5,600 – €4,950 = €650.

Thanks to her entitlements and credits, Claire’s tax bill for 2020 is a mere €650. It’s always about knowing what you’re entitled to and applying it correctly!

Meet Jennifer and Stephen: a married couple with one child. In 2020, Jennifer, the sole earner, brought home €40,000. Being married, she benefits from an extended 20% tax bracket up to €44,300, rather than the €35,300 for single individuals.

On her income, Jennifer faces a tax of: €40,000 x 20% = €8,000.

Jennifer naturally has her PAYE tax credit worth €1,650. But, since Stephen isn’t working, she can also claim his Personal Tax Credit, doubling hers to €3,300. Additionally, as the sole working spouse with a child, Jennifer can claim the Home Carer tax credit, adding another €1,600 for 2020.

Combining these credits, Jennifer has a total of €6,550 to offset against her tax:
€8,000 – €6,550 = €1,450.

After maximising her entitlements, Jennifer’s 2020 tax bill is just €1,450. With the right knowledge and claims, family tax liabilities can optimise significantly!