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