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AVC

Rowantree1

Is it too late to set up an AVC for first time? I was 59 in 2020 and want to get tax rebate by contributing an AVC to get a rebate up to my tax liability of 8,878. However, part of that is my tax credits of 5,500.

Is the tax rebate limited to the amount of taxes deducted which was 3,500, though.

I know I have a limit of 35% of gross for AVC at age 59

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billyhead

It's never too late to start a pension.

coylemj

Is the tax rebate limited to the amount of taxes deducted which was 3,500, though.

Yes, the best you can do is to reduce your tax liability to zero. But you may be able to make an AVC contribution in respect of the previous tax year, I believe the deadline for 2021 is Oct 31st next. How you do this will vary from scheme to scheme so you need to ask your AVC provider.

abff

If you want to make a backdated AVC for 2020, you will need to do so by the tax return deadline - 31st October if paper return, 17th November if using ROS. You will also need to specify in your tax return that you want the contribution to be offset against your 2020 tax liability.

Rowantree1

Thanks for reassurance. Another question though. Over 65 has tax exemption of 18000 each or 36000 per couple.

I am here doing a spreadsheet of my tax credits and tax calculation for me for 2021 to 2026 from 60 to 65 years old.

There is a related tax question. I notice that at 65 years of age an individual gets 18000 tax exemption. Can it be shared among a couple filing together?

My husband is 65 in Mid 2021, can I calculate it only for his income or against my income too. As he is retired, I will be the partner with the income when he gets the exemption!

coylemj

There is a related tax question. I notice that at 65 years of age an individual gets 18000 tax exemption. Can it be shared among a couple filing together?

The answer is no.

If one or both of a married couple is 65 or older and they elect to be jointly assessed then, as a couple, they can avail of the 36K exemption. If they go for separate assessment, they are treated as two single people and if one of them is under 65, that person will not get any exemption i.e. only the 65 year old will get the 18K exemption.

If you are married or in a civil partnership and jointly assessed, you are exempt from income tax where:

your total income is less than the exemption limit

either you or your spouse is 65 or older.

https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/marital-and-civil-status/exemption-and-marginal-relief/exemption-limits.aspx

Rowantree1

Thanks for advice. I did single premium for 2020 yesterday, might need to do same for 2021, and started AVC. I will review once husband is over 65, to take into account the exemption of 18K on tax return 2022. I have a typo above, he is 65 during 2022, so have to wait for 2022 for effect of that exemption of 18000. I wish someone would give a class about calculating this type of tax thing!