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A Comprehensive Guide to Form 12 for Irish Tax Returns

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Understanding and correctly filling out Form 12 is crucial for anyone looking to ensure their tax affairs are in order. At Tax Returns Plus, with two decades of experience in offering independent and confidential tax advice, we’re here to simplify this process for you. This guide is designed to demystify Form 12, making it accessible and understandable to all. 

What is Form 12?

Form 12 is an annual tax return form used by individuals who have Non PAYE income of less than €5,000 in addition to their PAYE income. This includes people with supplementary income such as rental earnings, investment returns, or those who are self-employed but fall below a certain income threshold.

It is a document used by the Revenue Commissioners in Ireland to facilitate the self-assessment process for certain taxpayers. Primarily aimed at PAYE (Pay As You Earn) employees, including those with additional income sources or allowances, Form 12 is a crucial tool in ensuring tax compliance and accuracy in declarations.

Who Needs to File Form 12?

You’ll need to file Form 12 if you fall under any of these categories:

  • Individuals with income below the self-assessment threshold: If your self-employed or Non PAYE income falls below the self-assessment threshold set by Revenue (currently around €5,000), you can use Form 12 instead of a full self-employed tax return.  This applies to Non PAYE income such as Non Proprietary Directors (less than 15% share ownership) fees, dividends, foreign income and small trade income and limited rental income. 
  • PAYE Income with Additional Income: If your main income is through employment with PAYE but you have additional sources of income exceeding a specific amount (which can change year-to-year), you’ll need to file a Form 12 to declare this income.
  • Tax Credits or Reliefs: Even if you don’t have significant taxable income, you might still need to file Form 12 to claim tax credits and reliefs you’re entitled to.  These tax credits help to reduce any tax liability and, on occasion may result in a tax refund.

Do I Need to Pay Tax if I Earned Less than €5,000 ? 

There seems to be a common misconception that income below €5,000 from non-PAYE sources is tax-exempt. However, your total income, including PAYE income, social welfare benefits, and non-PAYE income, is considered for tax purposes. So, if your total income exceeds €5,000, you may still pay tax.

Even if your total income falls below €5,000 and you have no tax liability, you are still obliged to declare your income to Revenue by filing a tax return. This is important because a tax return is the only way to claim a tax refund if you’ve overpaid taxes throughout the year.

When is Form 12 Due?

If you have additional Non PAYE Income the deadline to file your Form 12 is typically October 31st of the following year. So, for income earned in 2023, the deadline to file your Form 12 would be October 31st, 2024. 

Form 12 vs. Form 11: What’s the Difference?

Its essential to understand the differences between Form 12 and Form 11, the latter being more detailed and used by self-employed individuals with higher income levels. Many people get confused between Form 12 and Form 11. So here’s a quick breakdown:

  • Form 12: This form is used by employees who have a small amount of extra income (less than €5,000)  in addition to their PAYE income. It is a less detailed tax return than a Form 11.
  • Form 11: This form is more comprehensive and used by individuals who have Non PAYE of more than €5,000.  This applies to both  those who have PAYE income and those that don’t have PAYE income.  Once your Non PAYE income exceeds €5,000 then a Form 11 becomes obligatory as per Revenue rules.

Benefits of Using Form 12

Filing Form 12 can offer several advantages:

  • Reduced Tax Bill: By declaring all your income and claiming appropriate reliefs, you might end up paying less tax.
  • Tax Credits & Reliefs: You can claim credits and reliefs you’re entitled to, such as the rental tax credit, medical expenses, mortgage interest tax credit, or work from home, further reducing your tax liability.
  • Peace of Mind: Filing your return accurately ensures you comply with tax regulations and avoid potential penalties.

Filling Form 12: A Step-by-Step Guide

Form 12 can seem overwhelming at first glance, but it’s designed to be completed section-by-section. Here’s a simplified breakdown of the key sections:

  1. Personal Details: This section gathers your basic information like name, address, PPS number, etc.
  2. Income: Here, you’ll declare all your income sources for the tax year. This includes income from your business, rental income, foreign income, and any other relevant sources.
  3. Expenses: If you’re self-employed, you can claim legitimate business expenses incurred while generating your income. This could include office supplies, travel costs, rent, and more. Remember to keep proper records of your expenses for verification purposes. 
  4. Tax Credits and Reliefs: This section allows you to claim any tax credits or reliefs you’re entitled to. These could be tax credits for medical expenses, rent allowance, single-parent credit, or charitable donations.
  5. Summary and Calculations: This section summarizes your income, deductions, and tax credits, ultimately calculating your tax liability.

How to Obtain a Form 12

Currently, there are three options for obtaining filing a Form 12:

Online Filing (eForm12):

This is the most popular and convenient option, but excludes Capital Gains Tax details. Contact a professional such as Tax Return Plus to find out how we can help.

Paper Return

This manual/paper form option can be printed, completed and returned to Revenue. However, it is not very convenient and you do not know your tax result until Revenue calculates and informs you of the final result.

Form 12S (Online or Paper)

Visit www.revenue.ie and file an online Form 12S. Note: Capital Gains Tax (CGT) details cannot be submitted through eForm12.

Conclusion

Form 12 doesn’t have to be a source of stress. With the right guidance and understanding, you can navigate this essential tax document with confidence. 

Whether you’re a PAYE employee with supplementary income or a self-employed individual under a certain threshold, Tax Returns Plus is here to support you through every step of the Form 12 filing process. We aim to simplify tax compliance, ensuring you can focus on what matters most to you.

For personalised advice and assistance with your tax returns, complete our short form now to receive a quote and find out how our team can help you with your Inheritance tax return this year.

If you found this guide helpful, make sure you check out some of our other helpful guides.

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