DISCLAIMER: This information is a summary only and is not intended to constitute tax advice. For tax advice consult a Tax Advisor only.
An Irish PAYE worker should request a Statement of Liability (formerly known as a P21) for several important reasons:
- Tax Refunds: The Statement of Liability helps determine if you have overpaid tax during the year. If you have, it will show the amount you are due to be refunded.
- Tax Underpayments: Conversely, the statement will also indicate if you have underpaid tax, helping you understand any liabilities you need to address to avoid penalties or interest.
- Tax Credits and Reliefs: It provides a summary of the tax credits and reliefs you have claimed. This helps ensure you are receiving all the tax benefits you are entitled to.
- Income Verification: The statement serves as an official document verifying your income and tax paid for a specific year. This can be useful for personal financial management and for applications that require proof of income, such as loan applications or social welfare benefits.
- Review of Financial Information: It offers a comprehensive review of your financial information, allowing you to verify that all the information recorded by Revenue is accurate and up to date.
- End-of-Year Balancing Statement: It acts as an end-of-year balancing statement, summarizing your total income, tax paid, and any other relevant financial details. This can be useful for personal records and financial planning.
- Peace of Mind: Knowing that your tax affairs are in order and that there are no surprises can provide peace of mind, reducing stress related to potential tax issues.
- Future Tax Planning: Understanding your tax liabilities and refunds can help you make informed decisions for future financial planning, including adjustments to your tax credits or deductions for the coming year.
By requesting a Statement of Liability, a PAYE worker can ensure their tax affairs are accurately managed, take advantage of any potential refunds, and avoid unexpected tax bills.
Dara Burke
Web Entrepreneur
Dara is the founder of myTaxHero.ie, an organisation whose mission is to help young workers survive the cost-of-living and housing crisis in Ireland. Dara spent ten years abroad, living and working in Asia, the US, the Subcontinent and elsewhere. He returned home over a decade ago. After experiencing housing instability himself during a bout of serious illness. He does what he can to pressure the powers-that-be into coming to terms with the mess they’ve created.