Form 12: The Ultimate Guide

Most PAYE taxpayers assume the requirement to file a tax return doesn’t apply to them.

Like a lot of people, you might just check your P60 and your statement on tax credit – and that sums up your tax housekeeping.

In recent years, the Revenue has focused their efforts to ensure all taxable income is being accounted for. This means there is an increasing number of people who need to file tax returns as more are falling into the scope of self-assessed income tax.  

The Revenue issued approximately 33,000 Form 12’s to PAYE taxpayers last year.

The Form 12 is for people whose main income is PAYE employment or pension income. It is generally used to declare additional income, claim tax credits and allowances.

Self-assessment can be a daunting experience. But don’t worry! Set out below are some tips to help guide you through the process.

Let’s start with the fundamentals…

What is a Form 12 and why do I need to submit it?

A Form 12 is used to declare any additional income outside of your regular PAYE income which is less than net €5,000 (and provided your gross non-PAYE income before expenses do not exceed €30,000).

 Examples of additional income include:

• Rental income, Airbnb income

• Additional income from a trade or profession (e.g. freelance work, teachers giving grinds, extra income from operating a taxi)

• Dividend income on shares

• Foreign income from rental properties

• Foreign income or foreign pensions

• Details of foreign bank account

It’s good to remember, just because you are required to complete a Form 12, this does not mean you owe money.

In many cases, you may even be due a refund.

Tax Form 12 can be used to claim tax credits such as certain medical expenses which are not provided for on your tax credit certificate. You will not be required to pay PRSI if your total annual net income is below €5,000.

If your non-PAYE income is greater than €5,000 then you need to register for Income tax and complete a Form 11 as a ‘chargeable person’. Further details are below.

Where can I get a Form 12?

There are three ways to file a Form 12:

Online Form 12:

To help you complete your return, the online form pre-populates certain fields from your Revenue record. 

You need only complete the sections of the form that are relevant to you.

Useful Tip: The eForm 12 does not provide for returning Capital Gains Tax (CGT) details. You must fill out a separate CGT return.

How to:

The Form 12 can be completed online through the Revenue website. You need to click the  ‘eForm12’ under the myAccount section. 

For this option you will need a pin number. If you are not registered for MyAccount, you can register on the revenue website.

You will receive your pin in the post, and this can be used to access the e-form

Paper Filing:

The paper form may have been sent to you in the post or you may choose to print the pdf from the website.

The paper form does not contain any pre-populated fields. There is however a section which allows you to submit Capital Gains Tax details.

How to:

The pdf form can be printed, populated and sent into Revenue. The return address of your Revenue office should be printed on the form. www.revenue.ie to confirm the correct address.

Form 12S (online or paper)

This is the relatively new and simplified Form 12 for PAYE taxpayers/pensioners.

It is a 4-page document and has been developed for those with relatively straightforward tax affairs.

How to:

The Form 12S can be completed online through the Revenue website. You need to click the  ‘eForm12S’ under the myAccount section.  As detailed above, you will need to register in advance with Revenue.

The paper form can be printed from the Revenue website as set out below.

Who fills out a Form 12?

If you wish to declare additional income or settle tax on non-PAYE income (such as rental income or income from savings) where the amount is less than €5,000 you will have to file a Form 12.

If you wish to claim certain tax credits (such as health expenses) you can do so by filing a Form 12.

The option of filing a Form 12 only applies to non-proprietary directors. A proprietary director is a director, who owns more than 15% of the ordinary share capital of a company.

Proprietary directors are obliged to file a Form 11 annually regardless of whether they have any chargeable income in the year.

I’m a pensioner – should I be filing a Form 12?

If you are a pensioner and are receiving additional income (which when added to your state pension) brings you into the tax net, you are required to submit Form 12 if you are not already being taxed on that income. You can check you tax credit certificate to see if you have already been taxed on it.

If your sole income is your State pension, it will not be necessary to file a Form 12. While the State pension is taxable, if it’s your only income, you’ll be under the limit for filing.

You may also be entitled to an exemption from DIRT if you are over 66 AND are under the income tax exemption limit (currently €18,000 for individual and €36,000 for married couples).

If I have a private pension in addition to the state pension, do I need to file a Form 12?

The answer is “it depends”. If you are 65 or over and receiving more than €18,000 for people who are single, widowed or a surviving civil partner and €36,000 for a married couple or those in a civil partnership, then you will need to file a Form 12.

If your combined private pension and state pension is less than the €18,000 and €36,000 thresholds respectfully and it will not be necessary to file a Form 12.

You can also contact Revenue to get your tax credits adjusted so that any tax you owe on your State pension is deducted from your occupational pension payments. If you do so, you would not need to file a Form 12.

Why did I receive a Form 12 to fill in for the first time?

You may have received a Form 12 for many reasons. It may have been circulated by Revenue if they believe you have additional sources of income. Revenue also sends out Form 12’s randomly to taxpayers and if so, you are obliged to file it.

Interestingly, Revenue obtains data from a variety of sources, including banks and the Department of Employment Affairs and Social Protection. Some examples are below:

Commentary suggests that there has been a recent drive to investigate supplementary income from teachers doing grinds, rental income, and PAYE workers doubling up as taxi drivers.

Revenue have not sent me a Form 12. Can I ignore it this year?

You should not ignore it! If you do not receive the Form 12 from Revenue it is not an excuse. The onus is on you to declare your additional income as it is a self-assessed system.

Revenue have become stricter regarding the declaration of additional income. In recent years, Revenue have started to focus on it more than ever.

What is the deadline for completing the Form 12?

The deadline for submitting a paper Form 12 is 31 October in the year following the tax year (so for 2019, the deadline will be 31 October 2020).

If you file a Form 12 on ROS (and pay your tax liability via ROS) you can avail of an extended deadline. The extended deadline generally falls in the second week in November (the specific date varies from year to year). 

If you do not submit your Form 12 on time, a surcharge will be added to your tax bill as follows:

How do I complete a Form 12?

You can complete the Form 12 yourself and will need the following details to hand:

• Your PPS Number

• Your P60 for the relevant year

• If you are jointly assessed, your spouse’s P60 for the relevant year

• Your tax Credit Certificate or details of tax credits to be claimed (e.g. single parent family credit, PAYE credit, medical expenses)

• Details of other income e.g. deposit interest, income from grinds, rental income, rent from foreign properties

• Details of allowable expenses (eg: rental expenses insurance, mortgage interest, PTRB fees, repairs and maintenance, letting fees…..).

• Relevant log in and pin number details if completing online version

How do I complete a Form 12: pitfalls to avoid!

The Form 12 seems relatively straightforward, but it does does assume you have a certain amount of tax knowledge. Be aware of the following pitfalls:

• The Form 12 does not explain what reliefs and tax credits apply to you.

• The Form 12 does not explain what specific details you need to declare.

• The eForm 12 does not provide for the return of capital gains tax. If you have disposed of any chargeable assets, you will need to complete a separate return for capital gains tax and submit it to your Revenue office. Where are you getting this from?

• If you find yourself guessing the answers to certain questions, it may result in you entering incorrect data against your tax record.

I am confused about what rental income to declare on my Form 12. Help!

If you are receiving rental income you must declare it even if you are not making a profit on it. It is a common mistake for people to believe they do not have to file a return because their mortgage is bigger than the rent they receive on the property. You must file the return regardless of whether you are making a profit.

You will first need to arrive at a profit or loss figure. This figure is reached by deducting all allowable expenses on the property from the rent you have received. we can help with this!

One area of confusion relates to the treatment of mortgage repayments. Remember you cannot claim relief on any of the capital repayments you make against your mortgage. The interest you are repaying on your mortgage is the only allowable deduction. For the year of assessment 2019 it has increased to 100% of the interest as an allowable deduction for residential properties (85% in 2018).

It can also be difficult to ascertain whether certain expenses can be claimed in full each year, or if should they only be claimed over an 8 year period as capital allowances. That’s where an expert can help to make sure you claim everything that’s right.

Finally, remember that the property must also be registered with the PRTB for the interest charge to be allowed as a deduction

Is it true I can claim tax credits through the Form 12?

Yes, the Form 12 allows you claim tax relief on a variety of tax credits and allowances. There are some silver linings to filing a tax return! You can submit claims for the last four years and you never know, Revenue may owe you a refund.

Examples include flat rate expenses such as medical expenses, tuition fees paid health expenses; home carers tax credit; foreign dividends; medical insurance relief; nursing home expenses; one-parent-family tax credit; and owner occupier relief.   

Useful Tip: You should keep relevant receipts for six years in case of an audit. As we all know, a lot of receipts are processed electronically these days (and this should make it easier to keep records for longer).

Just make sure you save all receipts to one dedicated folder. It can be hard to find them in years to come.  For example, if you have private medical insurance, ensure receipts are sent back to you and they are saved in sub-folders for years to come.

What do I do if my non-PAYE income is greater than the threshold mentioned?

If you are not self-employed and earn more than €5,000 outside of the PAYE system (e.g. savings, dividends, giving grinds, Airbnb income), you will need to file a Form 11.

This means you will be subject to self-assessment as a so-called “chargeable person”. A chargeable person for self-assessment purposes is a person who is chargeable to tax on income on that person’s own account or on another person’s account in respect of a chargeable period.

You must therefore file a Form 11 (and not a Form 12) for that year. The Form 11 is more comprehensive and it is the same form that a self-employed person or proprietary director files.

If I am not a chargeable person but I have some small additional income, do I need to file a Form 12?

If you have a PAYE source of income and your net assessable non-PAYE income is less than €5,000, you will not be treated as chargeable person (provided your gross non-PAYE income before expenses does not exceed €30,000). This is on the condition your non PAYE income is coded against PAYE tax credits or fully taxed at source.

It’s worth noting that you must still inform Revenue of this income. You can do this by contacting your local Revenue office, or by filing a Form 12, or Form 12S (further details are above).  

What tax will I owe?

You may owe various taxes on your additional income such as income tax, PRSI and USC. Each source of income should be examined separately. For example, if your income is generated from regular savings or investments, DIRT tax will be deducted at source and you will not need to pay tax again.

You may also be able to arrange with the Irish Revenue to have the tax due on your nonPAYE income collected by reducing your annual tax credits. Taxpayers who have made this arrangement can file a Form 12.  Calculating the tax due can be a complicated process and it can be valuable to seek advice when submitting your filing.

Where can I get help?

If you have small amounts of extra income and wish to declare it, you can always contact your local Revenue office with questions.

If you just want to hand it all over for someone else to worry about, then our team and Lalor & Company would be very happy to help.

What Lalor & Company can do for you?

We will check your tax credits, reliefs and income to ensure you are maximising reliefs available while remaining compliant. We can carry out PAYE reviews of the previous four years and we can claim any refunds that may be available.

We also offer a free initial consultation and if you are happy to proceed, then our fee for advice, completion and submission of a Form 12 starts from €250 (excl VAT).

Contact richard@laloraccountants.ie or 0404 68126 for more details.