Income protection tax relief is a tax-free amount that you can save on your income protection insurance premiums. It’s available to those who have a job and pay employment income tax, but don’t have any other sources of income. To be eligible, you must have paid insurance premiums in the tax year before your claim started and you must pay at least €3,000 per month for at least five years.
Income Protection Tax Relief
Income protection tax relief is a scheme that allows you to claim back tax on your premiums. The purpose of this scheme is to incentivise people to take out income protection insurance and make sure they are protected against illnesses or injuries that may affect their ability to work.
The way it works is simple: If you pay for your own premium, then when you file your annual tax return with Revenue (the Irish revenue service), they will give you back some of the money spent on premiums as a deduction from your income before calculating how much tax has been paid by both employer and employee on each paycheck. You’ll need proof from an insurer that shows how much was paid in premiums during the year, along with documentation showing any other deductions taken off wages such as student loans or child care expenses etc…
Who Can Claim?
Who Can Claim?
If you’re a tax resident in Ireland and earn less than your income protection amount, then yes! You can claim. The only requirement is that you are over 16 years of age.
How to Apply for Income Protection Tax Relief
The first step to applying for income protection tax relief is to determine whether you are eligible. If you are self-employed, you can apply through your accountant. If you are employed, your employer will provide the appropriate forms and information about how to proceed. If neither of these options applies to your situation and Revenue has not notified you that they have made an error in assessing your tax bill, then there may be another option available: direct application with Revenue (see below).
Income Protection Tax Relief Amounts
The amount of tax relief you can claim depends on your income. If your total taxable income is less than €100,000, then the maximum amount of tax relief that’s available to you is €100,000 per year. This means that if you earn more than this threshold (which isn’t exactly easy!), then the amount of income protection cover that qualifies for tax relief will decrease as well.
For example, if someone earns €130K annually and buys a level 2 policy worth €150K with no medical questions asked (which is rare), they’ll only get 75% back in terms of tax relief because their total taxable income exceeds the limit set out by Revenue Commissioners:
$130K x 25% = $33K – $33K = $0
Takeaway:
As you can see, income protection can be a lifesaver in the event of illness or injury. But what if you’re already covered? You may still have room for improvement when it comes to saving money on tax.
If your employer offers a scheme that allows them to contribute towards your pension fund, for example, it’s worth checking how much they’re putting in and whether there are better options available. If so, talk to them about switching over (and make sure they document this change so they don’t accidentally double-contribute).
We also recommend taking advantage of any other opportunities that arise during the year–for example, if there are any changes made by way of legislation which affect your personal circumstances such as marriage or divorce then do look into making changes at work too.
Conclusion
In summary, Income Protection Tax Relief is a great way to save money on your taxes. This type of insurance can help you pay your bills in the event that you become unable to work due to illness or injury. The premium payments are tax deductible and can be claimed against any income tax liability in Ireland.