Q I am really concerned about the impact of inflation on me and my family. What can I do to protect myself?
A The entry of inflation into the daily life of the population was sudden and extremely sharp.
According to Frank Conway, founder of financial services firm MoneyWhizz and a qualified financial advisor, the rising costs of everyday necessities like electricity, gas and groceries are a stark reminder of how inflation impacts household budgets and day-to-day financial well-being. Inflation hits us all in two ways.
It has an effect when prices rise. And in the long run, it undermines the purchasing power of money, he said. So in the short term, this means we have to spend more money to buy the same shopping basket. In the long run, however, this means that calculations and assumptions we may have used to plan for retirement are somewhat redundant. Mr Conway said short-term behavioral changes around how we use food and fuel could offer some breathing space.
It is estimated that food waste in Ireland costs each household around €700 a year. In addition, how we control fuel consumption can also be examined more closely. As more people return to work, programs that include bike-to-work and tax savings are ways to cut costs.
When it comes to the long-term value of money, some investment will be needed to maintain purchasing power rather than leaving money on deposit, he said. This can be done tax-efficiently through one of the many pension options available in Ireland. In the non-retirement space, try to diversify through one of the many fund options available, he said.
Q I’ve been paying around €50 a month for prescription drugs for the past few years. I made no tax claims for these expenses. Is it worth deducting these expenses for tax purposes or is it more effort than it’s worth? Do you have any idea what a claim would be worth to me?
A It’s always worth claiming your medical expenses – after all, it’s your money. Many healthcare expenses are tax deductible. According to Barry Cahill of tax advisory firm Taxback.com, these can be your own personal expenses or expenses you paid for a family member or an individual.
You can usually get tax breaks for health care expenses at your standard tax rate (20 percent). However, there is a 40 percent tax break on nursing home expenses. Mr. Cahill said.
To be eligible for relief, the medical service you paid for must be performed or recommended by a licensed practitioner, such as a doctor or dentist. Tax breaks are available for a wide range of medical expenses, including medical and counseling services, maternity care, diagnostic procedures and prescription drugs.
If you’ve never claimed tax credit for your medical expenses, you can go back four years to claim your tax refund. In your case, you pay €50 per month for prescription drugs. With that in mind, you could be entitled to a €480 tax refund, Mr Cahill said.
Q I am a widow and 67 years old. I made a will and gave equal shares to my three children who are all married with children and mortgages. I have a decent pension. I have about $80,000 in prize money and $10,000 in the credit union. I have an investment house that I want to put on the market with an asking price of €600,000. It’s not mortgaged. I am selling to give my three children a pillow while they are young enough to enjoy it. I plan to give everyone €100,000. Do I have to inform the tax office about this gift for her?
A You can now gift each of your children €100,000. Assuming they haven’t received any previous gifts or inheritances from a parent, that amount is well below their tax-free Capital Acquisitions Tax (CAT) threshold, according to attorney Susan Murphy of MakeMyWill.ie. The exemption limit is currently €335,000.
You don’t have to tell the IRS about the gift, but it would be wise for the children to file a gift tax return so an accurate record is kept, she said. You can submit this online and the form is relatively simple.
To ensure there is no capital gains tax (CGT) on the sale of the investment property, it would be wise to speak to your accountant, Ms Murphy said.
https://www.independent.ie/business/personal-finance/your-personal-finance-questions-what-can-i-do-to-protect-my-family-from-the-impact-of-inflation-41535461.html Your Personal Financial Questions – What Can I Do To Protect My Family From The Effects Of Inflation?