You may have seen reports in the media of the Revenue Commissioners writing to some pensioners over issues relating to incorrect tax payments for the year 2022.
According to Revenue, the vast majority of people, including most pensioners, pay the right amount of tax automatically through the PAYE system. It is understood that anyone who receives a letter about a possible underpayment will be informed about how and where to seek assistance if needed. Revenue has stated that where there is an underpayment, taxpayers are not required to make any immediate payment; that any underpayment will be collected through a reduction of tax credits in future years,
As a general rule, it is advisable to make a tax return annually, even for those on PAYE. It also provides an opportunity to claim credit for allowable medical expenses and declare any additional income. For example, income under the Rent-a-Room Scheme should be declared annually, even if it is not subject to taxation.
It is important to note that anyone who is receipt of a pension from the Department of Social Protection (such as the State Pension Contributory or the Widow’s Pension) in addition to an occupational pension, needs to declare that social welfare income annually on their tax return. The Department of Social Protection does not take any tax from social welfare payments before they are paid out. They are made gross to the recipient.