Are you due a refund? Nearly 500,000 workers paid €600 too much to the taxman

Households have been urged to check the income tax they are paying after it emerged that hundreds of thousands of people are overpaying on their PAYE income every year. The call comes after it emerged that close to half a million people overpaid a total of €300m in income tax last year alone. Over the last three years a combined €620m has been overpaid in income taxes by PAYE workers, according to Revenue.

This is despite household budgets being under severe strain from the cost-of-living crisis. The figures indicate that a typical taxpayer may be missing out on around €1,000 in tax refunds from Revenue. Experts at Taxback.com said the average tax refund its customer get is even higher at €1,880.

Figures obtained by Sinn Féin finance spokesman Pearse Doherty show that around 300,000 taxpayers overpaid income tax in 2019. Revenue puts the overpayment by these workers that year at €170m. In 2020 some 270,000 are estimated to have overpaid a total of €150m in income taxes. And last year €300m was overpaid by 450,000 taxpayers . There are around 2.5 million taxpayers in the State.

Revenue has urged PAYE taxpayers to file a tax return to ensure they are getting all the tax credits and allowances they are entitled to get each year. Tax experts said many taxpayers are entitled to additional tax credits or reliefs that are not applied automatically during the year. This could include the home carer tax credit, or year of marriage tax relief. Workers who incur medical or certain dental expenses during the year will likely be entitled to a refund of 20% of the cost. And emergency tax is common among young workers, such as students or those starting their first employment, according to Taxback.com chief executive Joanna Murphy.

Mr Doherty was told by Finance Minister Paschal Donohoe in a Dáil reply that Revenue pays out millions of euro to PAYE workers every year who have overpaid their taxes. Mr Donohoe stated: “To date, Revenue has refunded €430m to 620,000 taxpayers in respect of the 2021 tax year. “In respect of tax year 2020, €440m has been refunded to 660,000 taxpayers, while just over €500m was refunded to 800,000 taxpayers in respect of 2019.”

But despite this, there is still millions of euro that is owed to hundreds of thousands of PAYE taxpayers in overpaid income tax.

Revenue is currently writing to taxpayers who may have overpaid or underpaid tax in these years, inviting them to submit returns to finalise their tax position. In the past month Revenue has written to more than 50,000 PAYE taxpayers. Revenue said it makes preliminary end-of-year statements available to PAYE taxpayers through the myAccount service each year. This sets out each taxpayer’s provisional tax position for that tax year, based on information available on Revenue records. It said taxpayers who want to claim a refund for overpaid tax should complete an income tax return.

Mr Doherty encouraged people to check and claim overpaid tax in midst of cost-of-living crisis. He said the amounts that could be claimed could go some way to meeting higher costs of energy, motor fuel, mortgages and food.

Experts said almost every worker will be entitled to claim additional credits or relief, and said the best way to do this is to file a tax return.

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