Underpaid tax need advice

Hijpo

This is huge for me and any advice would be extremely settling because right now I have no idea who to ask or what I can do.

In a nutshell I got an email from revenue last Thursday saying the preliminary statement for 2020 shows i underpaid tax. Alarm bells went off and when I investigated I had a load of tax cert amendments from about 2019 through to 2022.

I got married in 2017, in 2019 we chose to be jointly assessed, my wife worked part time and i worked full time. all my wife's tax credits should have gone to me. However, for some reason my tax credits went to my wife, my wife's tax credits went to me and we were jointly assessed so looks like we ended up with way more tax credits than we should have as a married couple.

After a few iterations of tax certs it looks like it was finally sorted in September 2021, when my wife had zero tax credits and I had 3300 as expected. My wife stopped working around 2020.

My guess (knowing little about taxes) is that its roughly 10k in tax credits therefor 10k in under payment. If they expect that level of underpayment back over maximum 4 years (according to the email) we will be screwed as a single income family with two kids.

Do I have any options?

con747

https://www.boards.ie/discussion/2058357208/underpaid-tax-need-advice

Find out exactly what you owe and do up a spreadsheet of all your income and outgoings and they should be able to do up a payment plan or if you can try offer a settlement figure that might work. I am only basing that on a family member who owed €8,000 and done that about 7 years ago paying €3,000 so I don't know how revenue are now in the same situations. Hopefully some of the financial regulars here can advise you better.

Deeec

As a married couple with one income your tax credits should be higher than 3300 if you are a PAYE worker.

Also as your wife doesn't work and stays at home with the kids you are entitled to claim the home carers tax credit. Has this being claimed? If not you need to claim this.

Do you have any friends who are accountants or work in payroll. They would be able to do quick calculations to check the situation. Should only take a few minutes for them. My guess is with a few amendments you won't owe the revenue 10k

rob316

You should still have you wife's personal tax credit plus her home carer tax credit.

Go into your revenue account and check you have all these. Don't worry about it you probably owe nothing or little.

Hijpo

Many thanks for feedback.

@Deeec Yes home carers tax credit has been claimed since my wife stopped working. I don't know anyone in finance unfortunately. Could be a case of biting the bullet and looking for a consultant.

@rob316 I have her personal tax credit and home carers tax credit.

There was a tax cert issued for the start of 2019 with an amendment January 2019.

A tax cert issued for 2020 with two amendments issued in March and October 2020.

Then a tax cert issued for 2021 with an amendment in september 2021 when my spouses side was zero and we had 6550 in tax credits. Everything from 2019 to September 2021 is screwed up.

ELM327

Assuming it's a revenue error which they corrected, and not anything you did to cause the error, I would start by explaining you cannot afford the 10k and offer a settlement amount (as the other poster said above).

Hijpo

@ELM327 is it even possible for me to make a mess of it so bad?

So, next steps, do I follow the instruction to submit the tax return before August or should I contact them before hand.

ELM327

I don't think so, but what I was getting at is, as it's their error, not your error or your attempt to defraud, they should be more willing to discuss and negotiate.

I had an audit on me a few years ago as I accidentally misclassified something and owed them money (not 10k mind!), but it was my fault nonetheless. Even then, the revenue folks were lovely to deal with and accepted my genuine mistake and agreed to remove the penalty fee they had charged.

As for next steps, I would probably consider getting professional advice. I know it will cost money but as there's 10k at stake it's no small change. Maybe start by contacting citizens information?

head82

I'd be very surprised if you owe 10k in underpaid tax. Did Revenue not provide you with the specific amount owed? It's just that I've heard of others receiving notice from Revenue recently about underpaid tax from 2020 but the specific amount owed was always stated.

Bear in mind, this was the height of the 'Covid' years so if you were in receipt of PUP or Wage Subsidy, this may have an effect on your owed tax.

This thread might be of some help:

https://www.boards.ie/discussion/2058270234/letter-from-revenue-saying-i-underpaid-tax-for-2020

GSBellew

2020, the year of Covid 19 and the TWSS / EWSS, were you paid via either of these?

This wasn't taxed at the time and unless you have already sorted the liability out that could form part of the 2020 underpayment.

poppers

https://www.boards.ie/discussion/2058357208/underpaid-tax-need-advice

Best bet is to ring Revenue. They are not the monster they are made out to be, they breakdown everything leverything you owe and then will allow you to repay the outstanding ammount over a number of yrs.

A relative owed about 6-7 k due to an error in tax credit allocation and they allowed it to be repaid over a 5yr period by reducing sibsequent tax credits for following 5 yrs

Hijpo

Thanks all.

@head82 @GSBellew

I was not receiving any covid payments at any time. I was working full time through the pandemic. Nothing in the email stated any amounts. It just said

"I am writing to you about your Preliminary End of Year Statement for the year 2020. You are now
required, under Section 879 of the Taxes Consolidation Act, 1997, to complete and submit an
Income Tax Return for 2020, before 5 August 2024."

And then there is a big Q&A section.

Deeec

https://www.boards.ie/discussion/comment/122300968#Comment_122300968

You need to get someone to look over the calculations to ensure that they are correct and that you are claiming all available tax credits and using the proper standard bands.

Its you and your wifes responsibility to have your tax credits correct so I disagree that its revenue that made a mistake. Revenue wont see it as their mistake - its your mistake unfortunately.

Deeec

https://www.boards.ie/discussion/comment/122301196#Comment_122301196

Are you sure the email is actually from revenue and not a scam? Revenue dont normally email you directly. They send a letter or you can see the details in ROS or the revenue 'my account service'.

shmeee

https://www.boards.ie/discussion/comment/122301196#Comment_122301196

How's all.

My first bit of advice would be to submit you tax return for 2020 online and then you will get an idea of what may or may not be owed. Then go about querying the break down of the tax liability with Revenue and work with them, they will help in these circumstances.

Then look back at 2020, did your employer claim TWSS as a support to keep you in employment? If so, this payment to you was not taxed at the time and is now taxable.

From what you said, hard to see where a 10k figure is also coming out of, seems very high on the info you've supplied.

Donald Trump

Sounds like a scam. Don't click on any links in the email and be brought to a site which looks like revenue site but will simply collect your details.

StormForce13

https://www.boards.ie/discussion/comment/122301289#Comment_122301289

Revenue have never sent me a letter since I registered for My Account/ROS about eight years ago.

All communication with them is electronic; however their direct emails are always simply notifications that I have new correspondence in my "My Account" mailbox.

Deeec

https://www.boards.ie/discussion/comment/122301337#Comment_122301337

Yep I agree that the way its done. The OP seems to have received an email though and stated what the email said. He needs to clarify for us if it was an email ( if so sounds like a scam) or just an instruction to log into my account or ros.

Avatar in the Post

As above, what is the email address on the communication, or did they simply refer you to your 'my account' with Revenue.

If the former, looks like an attempt at phishing. Have you given them any details?

Geuze

https://www.boards.ie/discussion/2058357208/underpaid-tax-need-advice

(1) make sure it's not a scam

(2) check all tax credits, for each year

(3) check SRCOP for each year

(4) do you submit normal Form 12 tax return each year, e.g. to claim tax relief on medical expenses?

Hijpo

Aapologies, it was an email notifying me of correspondence in my ROS inbox.

@Deeec even though they amended my tax cert four times with out me doing anything?? The only thing I ever did regarding tax was request to be jointly assessed and claim the home carers credit.

So, I followed instructions and viewed the preliminary statement for 2020 and it says 3300 underpaid. I did the same for 2021 and it's 2442. Total underpaid for those years is €5742.

2019 would have been the same as 2020 so if I include 2019 it's €9042 underpaid but I cannot view the statement for 2019.

Avatar in the Post

https://www.boards.ie/discussion/comment/122301444#Comment_122301444

Revenue can only go back four years unless you deliberately tried to defraud them. In this case they may be ignoring 2019.

Hijpo

https://www.boards.ie/discussion/comment/122301435#Comment_122301435

I haven't submitted any tax returns for any year, my understanding of the tax system is that my employer pays me and revenue collects the taxes they have applied to me. It's a very out of sight out of mind approach, I could have been overpaying taxes (very unlikely) for years without a clue.

Geuze

https://www.boards.ie/discussion/comment/122301604#Comment_122301604

Thousands of people submit tax returns every year.

You may want to claim tax relief on rent paid, medical expenses, or remote working, etc.

You may need to declare extra income, e.g. dividends, rent, etc.

Given that many people have medical expenses, it is completely normal and common to submit a Form 12 tax return.

I suggest that you submit Form 12 tax returns for 2020 onwards.

ELM327

Make sure you collect any legit expenses. Doctors fees for example are a tax writedown. Same as prescriptions. There's various WFH tax deductible expenses.

StormForce13

https://www.boards.ie/discussion/comment/122301604#Comment_122301604

The problem with that approach is that it assumes that Revenue knows everything about you even though you haven't told them anything about your current situation! I assume that, at some point, you did inform them that you had married!

As a former Citizens Advice volunteer it's an attitude that I often encountered with both taxpayers and social welfare clients, many of whom appear to have assumed that both organisations can pick up any changes in their financial circumstances by osmosis!

Remember that it's your money so you really owe it to yourself to mind it as best you can!

"when my wife had zero tax credits and I had 3300 as expected. My wife stopped working around 2020."

A jointly assessed couple, with kids, and one spouse not working, should have tax credits of around €7425 (for 2024). You also have an increased standard tax band.

DM me, I'll help you out here.

Hijpo

I'm not eligible to work from home. I'm an engineer for a medical device manufacturer so I am required to be on site.

This is why I avoid taxes and tax information 😄 seems like there's so much to know and if you get it wrong you are screwed, even in this case when I figured i was staying in my lane by only doing what was available on the revenue site.

Thanks everyone for your time and advice.

Hijpo

https://www.boards.ie/discussion/comment/122301883#Comment_122301883

Hi, sorry I was referring to personal tax credits only. In 2021 after the amendment my net tax credits were €6550. In 2024 they are €7425.

macrubicon

We had the same problem when we got married - we wanted to stay separately assessed though. Spotted it when my pay took a nose dive as all the credits went to my wife.

It took a call or two to Revenue to sort it out - can be painful to get through but they will help you out. You the one calling them looking to sort out a mess partly of their own creation by not assigning credits as you requested so there will be some settling to do but they will work with you on it to get it sorted.

Take downtheroad's help as it does sound like your credits are low.

StormForce13

https://www.boards.ie/discussion/comment/122301934#Comment_122301934

You studied for X years to get your engineering qualifications so you're well able to devote a few hours (yes, really!) to mastering the PAYE system. 😉

Overall, "tax" is a complex subject, but the PAYE bit (which is all that matters to the majority of us) is a very small subset of the whole and it genuinely is that easy to master. IMHO, the only people who get "screwed" by taxes are the ones who don't take control of their own affairs.

You've got a golden opportunity to learn all about it now, so why not go for it!

Oscar_Madison

Jayzuz OP you have me worried- will look into my own tax affairs now just to make sure I’m not facing similar - best of luck to you - hopefully it will work out ok

GSBellew

https://www.boards.ie/discussion/comment/122301196#Comment_122301196

You could have been working the entire time, but if your employer availed of the wage subsidy scheme this would leave you with income in the year that was not taxed through the PAYE system.

https://www.boards.ie/discussion/comment/122302126#Comment_122302126

Anyone reading this who is married, do not be afraid of joint assessment.

You will never be worse off with joint assessment. And if one spouse earns more than €42k (in 2024) and the other earns less than €42k then you will pay less tax by being jointly assessed.

If one spouse has no income and you have children, joint assessment allows you to claim the home carer credit which is literally free money from the state.

And if you are married with no kids, and one spouse has no income, the spouse with income will pay far less tax with joint assessment.

In summary, get married and avail of joint assessment 😎

https://www.boards.ie/discussion/comment/122302123#Comment_122302123

Log into your Revenue MyAccount

Click "review your tax 2020-2023"

Complete paye income tax returns for the 4 years, and claim all allowable tax reliefs and credits.

New statements of liability will issue for the 4 years, and hopefully reduce that amount you currently owe.

Revenue will recoup the new balance by reducing your tax credits for the next 4 years (2025-2028).

Do yourself a favour and buy a paye tax return course like the one below, best fiver you'll spend.

https://www.patreon.com/user/shop/2023-tax-back-steps-income-tax-return-123035?u=71745697&utm_medium=clipboard_copy&utm_source=copyLink&utm_campaign=productshare_creator&utm_content=join_link

macrubicon

https://www.boards.ie/discussion/comment/122302508#Comment_122302508

Totally - just check they do what you have asked them to do.

All my wife wanted to do was change the civil status while sending in her Medical expenses claim and ticked the box for separate assessment as we both need our own credits. Was someone making a mistake and changing us to joint that mucked things up for us.

https://www.boards.ie/discussion/comment/122305984#Comment_122305984

Takes 2 minutes to fix , either in your Revenue MyAccount or a call to PAYE helpline.

Candlel

https://www.boards.ie/discussion/comment/122301225#Comment_122301225

I know of a case similar to the OP where there was a marriage and then joint assessment but the revenue forms were incorrect so the taxpayers were not paying the correct taxes. But revenue tried to blame the tax payer.

https://www.boards.ie/discussion/comment/122309197#Comment_122309197

And Revenue then would have refunded any tax overpaid.

They aren't the big bad wolf that people try to make them out to be.

Deeec

https://www.boards.ie/discussion/comment/122309197#Comment_122309197

Its the taxpayers responsibility to ensure their tax credits are right not revenue - People dont seem to get this point at all. Your friends excuse that the forms were wrong is nonsense - if the forms were wrong as they put it, they filled them in wrong not revenue.

In joint assessment the tax payer decides how their tax credits and cut off are divided between spouses - this is so important. Most people dont bother doing this though and then blame Revenue when a problem arises. Many also are overpaying tax by not dividing their tax credits and cut off properly and they dont even realise it. Year after year they are overpaying. Remember that Revenue will not tell you that you are due a refund - the taxpayer has to review their situation and claim it

As @downtheroad said earlier everyone should take a little time to understand how tax is calculated. At a basic level tax isnt that difficult. It could put more money in peoples pockets come payday.

CramCycle

https://www.boards.ie/discussion/comment/122301444#Comment_122301444

The amended cert will have a number that you underpaid, check this first, it is very unlikely you owe 10k, even messing up credits, it is very hard to owe that much unless you misclaimed. Most likely it's a percentage of the credits you were mistakenly given twice. Double check all your credits that none are missing, medical receipts etc. Anyway, so a little over 2 or 4 k is more likely. Revenue are very good to deal with. I misclaimed before. I thought I was in the right (still do), they didn't but there was no meanness, just make sure you engage promptly. They just said, I see where you are coming from but you have to pay it back.

Hijpo

https://www.boards.ie/discussion/comment/122312854#Comment_122312854

No indication on the amended certs to say what's underpaid. It just gives applicable tax credits then tax bands for PAYE and USC.

The only place that seems to tell you is the Preliminary end of year statement for each year.

I understand it's tax that hasn't been paid but it's acknowledged that there is a cost of living crisis, we are a single income family of 4, one child in secondary school and the second due to start, I cant afford this. Haven't had the mental clarity to phone revenue yet, thinking about it would give you palpitations.

con747

https://www.boards.ie/discussion/comment/122314956#Comment_122314956

As stated before they are a lot easier to deal with than most give them credit for. Ring them, don't bury your head in the sand and wait for the right time. The right time is asap.

DisgustedTunbridgeWells

Apologies if I misunderstood your issue but if were allocated 10k in tax credits in error then you will owe the tax you would have paid on that 10k, so 2000 (20%) or 4000(40%), not 10k. Also in my experience revenue are very accommodating in that they can stretch any repayment out over a very long period, and they are very understanding in a case like yours s

Hijpo

https://www.boards.ie/discussion/comment/122315304#Comment_122315304

I'm just reading what the Preliminary Statements for 2020 and and 2021 say.

"Based on Revenue's records for 2020, you paid less Income Tax or USC than you were due to pay. This means that you owe Revenue €3,300.01 based on current information."

"Based on Revenue's records for 2021, you paid less Income Tax or USC than you were due to pay. This means that you owe Revenue €2,442.81 based on current information"

Tax credits for 2019 were also incorrect in the same way as 2020 so i presuming it's also €3300 because I can't see the 2019 statement.

shmeee

https://www.boards.ie/discussion/comment/122315706#Comment_122315706

You cannot request a statement of liability that is over 4 years previously.

You man be able to view it in your archived folder in MyDocuments.

Still can't understand how the tax credits were so wrong? Systems don't allow to add double credits etc. So unless you claimed a credit you weren't entitled to maybe?

And as others said, give PAYE a call on 01 7383636 and chat to them, they will be accommodating with this and help you work it out.

And they're your preliminary statements so add your claims for medical expenses etc to reduce what you owe or other reliefs you can claim.

https://www.boards.ie/discussion/comment/122315706#Comment_122315706

€3,300 for 2020 sounds like 2 x tax credits of €1,650, so you need to find out where this error came from.

The answer is in your tax credit certificate and statement of liability for each year. A good tax advisor or accountant will spot this in 5 seconds.

Hijpo

https://www.boards.ie/discussion/comment/122316033#Comment_122316033

Yes this is what happened. My personal tax credits were messed up.

We wanted to be jointly assessed with me taking all my wife's tax credits.

What actually happened was I got my wife's 1650 and my wife got my 1650 which gave us both 3300 each. On top of our employee tax credit of 1650 each we ended up with a net tax credit of 9900, that's just for 2019. This is the PAYE section for 2019.

Hijpo

https://www.boards.ie/discussion/comment/122315923#Comment_122315923

I am not tax savy and have a fear of claiming stuff I shouldn't because I didn't want to want to end up in a mess like this so I never adjusted tax stuff until I wanted to be jointly assessed with all the tax ccredits. Then this happens anyway.

NewbridgeIR

Got one of these last week. Not a scam. Just an email to say I had new correspondence. Small underpayment which I was able to reduce to c€80 by submitting a tax return with an additional credit for medical expenses incurred during 2020. Revenue came back and said it would be dealt with by reducing tax credits for next four years by €20 each year. Also did 2021 while I was online and that was an overpayment of €200 - funds arrived in my bank account two days later.

https://www.boards.ie/discussion/comment/122316091#Comment_122316091

That is messed up,not sure how Revenue system allowed that but it's on their end. Now they will probably say you should have reviewed your tax credit cert to check it was correct, yada yada, but they have made an error here.

The best recourse to you is reduction of your tax credits over the next 4 years to repay the balance. But that is seriously going to hit your net pay. I'd be putting a very angry call in to Revenue on Monday to ask how this error happened on their side, and demand repayment over something like 10 years (doubt they will agree to this but if you don't ask you don't get).

And complete tax returns for 2020-2023 to try to claim back any possible tax credits and reliefs, to reduce the overall liability for yourselves.