Med 1 and P21 question

Charlies Angel

So we (myself and hubby, jointly assessed) requested a P21 for 2011 and have an underpayment of 500 which we owe back to revenue.

We've paid Euro250 tax in the year 2011

Revenue advised they will offset what we owe (the 500) off credits for 2013.

So, we also have medical expenses which would bring us in 700euro.

As we only paid 250 tax, thats the max we can claim back on med 1.. Which will only serve to reduce our underpayment to 250.

My question is, if we offered to pay the revenue the underpayment due of 500 euro, say by cheque. ..Would that then mean we'd have paid 750 tax in the year, and could therefore claim back in the 700 (net) on the Med1?

Is this going to work or is there a way around this at all?

Any input appreciated!

relax carry on

Charlies Angel wrote: »

So we (myself and hubby, jointly assessed) requested a P21 for 2011 and have an underpayment of 500 which we owe back to revenue.

We've paid Euro250 tax in the year 2011

Revenue advised they will offset what we owe (the 500) off credits for 2013.

So, we also have medical expenses which would bring us in 700euro.

As we only paid 250 tax, thats the max we can claim back on med 1.. Which will only serve to reduce our underpayment to 250.

My question is, if we offered to pay the revenue the underpayment due of 500 euro, say by cheque. ..Would that then mean we'd have paid 750 tax in the year, and could therefore claim back in the 700 (net) on the Med1?

Is this going to work or is there a way around this at all?

Any input appreciated!

If you have and underpayment of 500 euro for 2011 and claimable health expenses of €3500 x 20% (€700), that should wipe out the €500 underpayment and refund you €200 of the €250 tax you paid.
All the above is subject to the €3500 health expenses all being allowable.

Charlies Angel

All health expenses 3500Euro are allowable.

However, Revenue informed me today, that as we've only paid 250euro tax in 2011, this is the max we can claim back on Med 1., then this would be deducted from the 500 we owe, so we'd still owe 250 and get no rebate from Med expenses.

I forgot to ask, if i settle the 500 underpayment immediately, how this would affect me.

relax carry on

Charlies Angel wrote: »

All health expenses 3500Euro are allowable.

However, Revenue informed me today, that as we've only paid 250euro tax in 2011, this is the max we can claim back on Med 1., then this would be deducted from the 500 we owe, so we'd still owe 250 and get no rebate from Med expenses.

I forgot to ask, if i settle the 500 underpayment immediately, how this would affect me.

Not sure if I'm missing something but unless the system has changed significantly in the last few months, if an underpayment exists in one year, then claiming an additional relief/credit against it in the same tax year, reduces or wipes out the underpayment.

As it stands if you claim your health expenses which were incurred in 2011, instead of getting 700 back, 500 is set against your 2011 underpayment and 200 is refunded.

Unless there is some other issue here, claim your 2011 health expenses and you will get a 200 refund with no underpayment on file.

allthedoyles

With such small tax paid in 2011 , could it be that one or both you may have lost some of the paye tax credit , if either of your earnings are below , say € 8,250 ?

Charlies Angel

Yes according to p21 my paye tax credit is less than my husbands.

Would that affect things overall?

I'm not disputing the underpayment but wondering if I submit med 1, will this just reduce the underpayment balance? or will it clear the underpayment, giving us a rebate.

mrs vimes

Hi Charlies Angel,

If your PAYE credit is less than your husband's then you are presumably not using all of your PAYE credit (ie your earnings are below 8,250)

I'm not quite clear on the underpayment of 500 - does this relate to 2011 or to a prior year? Is it the case that in 2011 you should have paid 750 in tax but only paid 250?

Did you request a P21 but not include the Med1? If so, just request a new P21 and you will then be refunded 200 of the tax you paid (700 less 500).

However, if the 500 underpayment relates to 2010 or a prior year then the 250 paid in 2011 could be an overpayment due to Med 1 expenses which could then be offset against the undepayment leaving you with nothing to be refunded for 2011 but a lower underpayment to be collected next year.

Not sure if I'm making myself clear, please ask if I can clarify it further for you.

Charlies Angel

Got sorted with revenue, thanks people. Rebate on its way.

thanks again