Medical costs are one of the most likely expenses which can be utilised by people in order to claim a tax refund in Ireland. Previous to 2009 you were entitled to claim tax relief in respect of these costs at the highest rate of tax that you had paid, i.e. if you paid income tax at 41%, you could expect a tax refund based on 41% of the cost of medical expenses. Since 2009, however, the relief has been restricted and the maximum refund available is based on 20% of the cost of medical expenses, regardless of the rate you pay. (Nursing home expenses are still relieved at the higher tax rate).
You would expect that this would mean that the average refund would fall significantly. However, official figures from Revenue indicate that tax refunds from claims in respect of medical expenses continue to make up a significant proportion of all refunds issued. For example, the average medical refund in 2008 was €287.70, the average medical refund in 2009 was €254.36.
These trends seem to be continuing in 2010 and 2011. One reason for this may be the continuing economic downturn over these years leading to more people choosing not to pay medical insurance premiums. By negating their insurance cover, these individuals are incurring the full impact of medical expenses, therefore, when it comes to claiming their tax back, they have a higher refund amount.
If this is the reason behind these trends, they will no doubt continue, as medical insurance premiums have risen significantly in 2011.
Finally don’t forget, if you still have medical expenses from 2007, submit your claim soon, as you will loose this opportunity at the end of the year.