top tax tips for retirement...top tax tips for retirement rought to you by ornmarket [s retirement...

Top Tax Tips for RetirementBrought to you by Cornmarket’s Retirement Planning Service

Tax & PAYE basics1

Tax changes in retirement2

Income outside of PAYE3

Inheritance Planning4

Filing a tax return5

Todays agenda

The PAYE System

Methods of Assessment

Standard Rate Band

Tax Credit

All income is assessable for tax, even in retirement

Your income is taxed at 20% up to your Standard Rate Band amount.

Anything above this is taxed at 40%.

Anything belowtaxed @ 20%

Anything abovetaxed @ 40%

What is your Standard Rate Band?

Standard Rate Band

3 methods of assessment:

JOINTSINGLE

What we will cover today

Standard Rate Bands 2019

John is single

One income Up to €35,300 @ 20%

Anything over @ 40%

Standard Rate Band

Standard Rate Bandsfor two incomes2019 Up to €70,600

@ 20%

Anything over @ 40%

Standard Rate BandAlan & Mary

are married or Civil Partnership

3 methods of assessment:Sharing Rate Bands 2019

How should they share* the rate bands?

*€9,000 rate band transferrable between spouses, maximum of €44,300 with one spouse

ALAN EARNS

€25,000

MARYEARNS

€50,400

€26,300 €44,300

Tax Credits

Use any available credits to reduce your tax bill

They are worth moneyand shouldn’t be ignored

Personal Tax Credits 2019

*transferrable between spouses, maximum of €44,300 with one spouse.

Single personTax Credit

€1,650

Receives a PAYE Credit*

+

€1,650

JOHN

*PAYE employment is required to get this credit.

ALAN & MARY

Personal Tax Credits 2019

Married or Civil Partnership

Tax Credit

€3,300

John & Mary receive a

PAYE Credit*

+

€3,300

Married or Civil Partnership Tax Credit can be shared also!

*now called Employment Credit. Both spouses need PAYE employment of over €8,250 each.

= €6,600

Are you eligible for these credits?

Home carer

Incapacitated child

Dependent relative

Age credit – single / married

Widowed with or without dependant children

✓

✓

✓

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Earned Income – non PAYE workers* ✓

*You cannot claim both PAYE credit and Earned income Tax Credit

• Tax documents are not posted.

• Only viewable by logging onto “myAccount” on revenue.ie.

• Everything is done online and in ‘real time’.

PAYE Modernisation

We can do this

for you!

Doctor, GP, consultant or hospital fees

Treatments and medicines prescribed by a doctor

Approved nursing home fees (40%)

Non-routine dental treatments

Dietary products on GP recommendation

Health Expenses

How to claim on health expenses

1.Make your medical

insurance claim

2. Drug Payment

Scheme

Max €124 pm by your family.

3. Tax relief through

MyAccount

Tax relief at 20%*

Keep the receipts for

6 years*Tax relief applies to medical expenses not reimbursed by medical insurance only.

Relief on tuition fees

Who is taking the course?

YouYour

children

Your grand

children

*1st €3,000 per household is disregarded.

Claim up to €7,000 per year per approved degree and post graduate

courses that you pay for!

Tax changes in retirement

Why do people overpay tax in retirement?

2.

Additional credits

Multiple sources of income

1.

Tax changes in retirement

1.Multiple sources

of income

Part-time work

Approved Retirement Fund (ARF)

Foreign pension

Partner/spouse earnings

Widow’s pension

Supplementary Pension

State Contributory Pension

Tax changes in retirement

2.Additional

credits

Age Credit - €245 the year you turn 65 or €490 if you are married.

Widowed or widower tax credit

Dependent relative tax credit

Deposit interest retention tax (DIRT) exemption

Income changes mid-year

PRSI Rate changes

Paying nursing home fees

Employer bills

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✓

✓

✓

✓

Tax changes in retirement

A retirees tax timeline

50 60 70

TuitionFees

Parent Nursing Home Fees

Deductions

from Gratuity

Single

Premium

AVC*

Inheritance

Planning

Spouse

Retirement

State Pension

PRSI

exemption(Age 66)

DIRT refund

ARF**

drawdown

Cap on USC

AMRF***

drawdown

*Additional Voluntary Contribution **Approved Retirement Fund ***Approved Minimum Retirement Fund

If you don’t, penalties and

late fees apply!

Income in retirement

ASC

You must file a return each year!

Earn more than €5,000 outside the PAYE system?

Income

Rental Income

Taxable Profits

Mary rents an apartment to students

Expenses

Rental Income Total Taxable Profits

€5,000

Mortgage Interest

Management fees

Advertising

Repairs

Insurance & Mortgage protection

€12,000

€400

€500

€200

€900

€3,000

€7,000

Self-Employment

Deposit Interest where

DIRT paid

Foreign Income

Irish Dividends where 20% tax

is deducted

Other Income

Benjamin Franklin 1789

Estate Planning

in this world nothing can be said to be certain, except death and taxes

• Find the best way to transfer your assets• Reduces your tax burden, tax rate 33%

Estate Planning

Make sure you avail of all possible reliefs and

exemptions

• Gift or Inheritance• Small gift exemption

– €3,000 per year, per person

Capital Acquisitions Tax (CAT)

€32,500 €16,250

CAT Rate = 33%

Capital Acquisition Tax (CAT) thresholds

Son or Daughter,from October 2019

€335,000

OtherParent, brother, sister, niece, nephew or grandchild

CAT Thresholds are a lifetime

allowance

House

Investments

Personal Items

Insurances

Pension funds

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✓

✓

✓

✓

All Assets inherited:

What is counted?

Subject to either Income Tax or CAT Tax

Estate Planning

Use the extended family thresholds to reduce tax burden.

What can you give in a life time?

Children working with you on farm or in business?

Is a child living with you?

€3,000 annual gift allowance

per person

Ensure you qualify for specific reliefs

when passing assets

Dwelling house

exemption

Calculate your assets and divide amongst number of kids.

Are they under or over threshold?

Will you leave your children with a tax bill?

Estate Planning Thresholds

Spouse

€335,000Children

€16,250Anyone not covered above

Thresholds as of 8th October 2019. All gifts and inheritances in same class aggregated since 5th December 2001. CAT exemptions are available, Agricultural Reliefs.

Exempt

Parent, siblings, niece / nephewor lineal ancestor/descendant

€32,500

Example

Family home

Holiday / Investment Property

Investment

Bank Account

Total Assets

€500,000

€100,000

€210,000

€68,000

€878,000

YOU

CHILD 1 CHILD 2

GRAND CHILD 1

GRAND CHILD 2

GRAND CHILD 1

GRAND CHILD 2

CHILD 1 CHILD 2

YOUR WILL

Example

Your estate

Children x 2

What’s taxable

Total tax at 33%

€670,000

€878,000

€208,000

€68,640

CHILD 1 CHILD 2

YOUR WILL

Example

Children x 2

Spouse x 2

Grandchild x 4

What’s taxable

Total tax at 33%

€670,000

€130,000

€0

€78,000

€25,740

Your estate €878,000

GRAND CHILD 1

GRAND CHILD 2

GRAND CHILD 1

GRAND CHILD 2

€45,500

€15,015

€0€16,250 each = €32,500

Agricultural Relief

Business Relief

Dwelling House Exemption

Gift Savings

Section 72

How to protect your family against Inheritance Tax?

Nursing Home Support “Fair Deal”

What is it?This allows you to transfer property value to pay for nursing home fees.

How does it work?

Your contribution:• 80% of all income inc. spouse if any• 7.5% of the value of any assets

Land / property assets can be deferred until after death under a nursing-home loan. (capped at 22.5%)

Example of “Fair Deal”

Property Value

€500,000

Credit UnionCash assets

€65,000

Pension (including State)

€25,000 pa

Long term Care per week

€1,000

€721 €37,500

Example of “Fair Deal”

Weekly Yearly

€1000Gross Cost Gross Cost €52,000

€426Gross Cost Family Cost €22,175

€574Gross Cost HSE Contribution €29,825

DeferredProperty Cost

€112,500

Deferred

Filing a tax return4

How to ensure Tax Compliance

Do it yourself Get Professional Help

Cornmarket TaxReturn Service

Do a Tax Return!

OR

We take the hassle out of tax

We are Public Sector experts

Our PAYE Income customers*:

Cornmarket’s Tax Return Service

Over €40 million has been claimed

back for Public Sector Employees

like you!*Source: Cornmarket PAYE Tax Return client statistics, 2018. Cornmarket’s Tax Return Service

is a tax based service and not a regulated financial product.

€1,100 average tax refund

82% received a tax refund last year

Let us do the work for you

To sum up

All income is liable for tax even in retirement

Make the most of tax relief and credits available

Passing on more money and the Fair Deal Scheme

Cornmarket Group Financial Services Ltd. is a member of the Irish Life Group Limited which is part of the Great-West Lifeco Group of companies. Cornmarket’s Tax Return Service is not a regulated financial product.

Let us do the work for you

Thank You

If you need any help with your tax affairs we are

available on (01) 408 4106

For a copy of today’s slides visitcornmarket.ie/retirement-seminars