Home Carer Tax Credit, Incapacitated Child, Employing a Carer Tax Relief

Family home carer incapacitate child

Home Carer Tax Credit, Incapacitated Child, Employing a Carer Tax Relief

If someone, young or old depends on you – you may qualify for Home Carer Tax Credit, Incapacitated Child Tax Credit or Dependent Relative Tax Credit

  1. Nursing  Home Tax relief,
  2. Private Nursing  Tax relief,
  3. Employing a carer Tax relief,
  4. Home Carer Tax credit,
  5. Incapacitated Child Tax credit,
  6. Dependent relative Tax credit

 

1.   Nursing Home expenses Tax relief

 

Who can claim tax relief on Nursing Home expenses?

  • The person paying the nursing home fees is the person who claims the tax relief, this can be more than one person.
  • Whoever pays the nursing home fees is the person entitled to claim the tax relief.
  • You can claim tax relief if you are paying the nursing home fees for yourself or for someone else.
  • The nursing home must provide 24-hour on-site nursing care.

 

How much tax relief can I claim on Nursing Home expenses?

  • You can claim 40% tax relief if you pay tax at the top rate.
  • The amount of tax you are refunded depends on the amount of 40/20% you actually paid in that year e.g. tax paid through wages or pension.
  • If you have no tax to pay for the year, you won’t receive a tax refund.
  • There is no maximum limit on the nursing home fees that you can claim.
  • You can only claim tax relief on the nursing fees amount you pay yourself.

 

When can I claim tax relief on Nursing Home expenses?

  • Nursing home expenses are normally claimed after the year end.
  • You can make a claim mid year by contacting your Revenue Office.
  • Note you will still need to file an end of year Income Tax Return (Form 12) even if you receive the tax relief during the same year. Follow the steps on ‘How to claim tax relief..’ below.

 

How to claim tax relief on Nursing Home expenses?

[If you’ve not registered your myAccount, you can follow Step 1 in my blog ‘Free guide on how to claim tax back in Ireland‘]

If you are jointly assessed, it is the assessable spouse (usually the one with the highest income) who needs to sign in and apply.

  • ‘Review Your Tax 2017-2020’ under the PAYE services section
  • ‘Tax Year’ from drop down box
  • ‘Submit’ for the Income Tax Return (Don’t worry you are not submitting it right now!)
  • Click OK – for Notice to file an Income Tax Return
  • Click Next – you will get instructions on what you need
  • Pg 2. Complete and check your personal details > Next
  • Pg 3. Check PAYE income is correct (if you encounter an error, answer No if you are in doubt for the Question was there 53 pay days in the year?)
  • Pg 4. You must declare any non-PAYE income you/your partner received for the year > Next
  • Pg 5. Select Health

Nursing Home Expenses

Approved Nursing Home Expenses – enter the amount paid for the year

PPSN of resident – enter the Personal Public Service Number of the person staying in the nursing home.

Name of Nursing Home – enter the Nursing Home’s name

Add

If you have any other medical/dental expenses include them under ‘Health Expenses’

  • Place a tick in the box next to the tax credits to agree that you wish to claim them > Next
  • Pg 6. When you’re happy with the figures then tick the declaration box and your claim will be submitted!

 

Fair Deal scheme
You cannot claim any amounts that the HSE have paid towards the nursing home care. You can only claim relief on the part you pay yourself.

Fair Deal Loan Scheme
The HSE gives you a loan to pay for the nursing home care. When you or the estate repay that loan to the HSE, tax relief can then be claimed on the loan repaid.

Learn more.. Nursing Home (Fair Deal) Loan Scheme

 

 

2.   Private Nursing Care expenses Tax relief

Who can claim tax relief on Private Nursing Care?

  • The person paying for the cost of additional private nursing care fees is the person who claims the tax relief, this can be more than one person.
  • You can claim tax relief if you are paying for private nursing care for yourself or for a relative.

 

Who can the qualified Private Nurse look after?

  • The qualified nurse can care for someone who suffers from a serious illness and requires home nursing

or

  • The qualified nurse can care for someone who requires extra nursing care than what is normally received in a nursing home.

 

What are the rules on hiring a qualified Private Nurse?

  • The qualified nurse can only be hired on the advice of a medical practitioner.
  • To claim this relief, you must provide a medical certificate that:
    • states that either the nursing care is required at home or in a nursing home
    • states the name and address of the patient
    • outlines the nature of the patient’s illness
    • covers the full period for which nursing is being claimed.
    • You must also provide the nurse’s full name and address, as well as proof of their nursing qualification.
    • You must keep a breakdown of all payments made to the nurse.

 

How much tax relief can I claim on Private Nursing Care?

  • Tax relief is given at 20% (similar to health expenses)
    • The amount of tax you are refunded depends on the amount of tax you actually paid in that year e.g. the tax you paid through wages or pension.
    • If you have no tax to pay for the year, you won’t receive a tax refund.

How to claim tax relief on Private Nursing Care?

Step 1 Add up your

  • Medical Expenses – add up your Private Nursing Care expenses and any other health expenses

(Do not include Nursing Home expenses with Private Nursing expenses)

  • Dental expenses
  • Refunds received from your Medical Insurer or health board

 

Step 2

[If you’ve not registered your myAccount, you can follow Step 1 in my blog ‘Free guide on how to claim tax back in Ireland‘]

If you are jointly assessed, it is the assessable spouse (usually the one with the highest income) who needs to sign in and apply.

  • ‘Review your tax 2017-2020’ under the PAYE services section
  • ‘Tax Year’ from drop down box
  • ‘Submit’ the Income Tax Return (Don’t worry you are not submitting it right now!)
  • ‘Click OK – for Notice to file an Income Tax Return
  • Click Next – you will get instructions on what you need
  • Pg 2. Personal details – complete and check details > Next
  • Pg 3. PAYE income page – complete and check details > Next
  • Pg 4. Non-PAYE income – complete and check details > Next
  • Pg 5. Tax credits & Reliefs
    • Health
    • Select ‘Health Expenses’
    • Non routine dental expenses = enter amount if any
    • Other medical expenses = enter amount for Private Nursing Care as a health expense here
    • Dental/medical expenses refunded = enter amount if any
    • Click Add
  • Place a tick in the box next to the tax credits to agree that you wish to claim them > Next
  • Pg 6. When you’re happy with the figures then tick the declaration box and your claim will be submitted!

 

3.  Employing a Carer Tax relief

Who can claim ‘Employing a Carer’ tax relief?

  • The person paying the costs of employing a carer is the person who claims the tax relief, this can be more than one person.
  • The person claiming the relief must not claim Dependent Relative or Incapacitated Child tax credit while claiming this relief.

 

Who can the Employed Carer look after?

  • The employed carer can care for you or your partner, you or your partners family relative.
    Relatives include any person you are or have been a legal guardian to.
  • The person being cared for must be totally incapacitated either physically or mentally for the full tax year to claim the relief.

 

What are the rules on Employing a Carer?

  • It is important to know that if you employ a carer directly yourself, you must register as an employer and apply PAYE, USC and PRSI to the carer’s pay.
  • If you employ a carer through an agency, the agency will act as the employer and you can claim tax relief on the fees you pay the agency.
  • The carer doesn’t have to be employed for the full year.
  • The carer must not be employed for household duties.

 

Payroll Express provides payroll services to employers employing carers, at very affordable prices. Talk to us in confidence for a no-obligation chat. Contact us via our website

 

How much tax relief can I claim on Employing a Carer?

  • Tax relief is given at the top rate of tax that you pay.
    • If you pay 40% tax on your income, then you will receive 40% tax back.
    • If you have no tax to pay in a year, you won’t receive a tax refund on the cost of employing a carer.
  • Tax relief is capped at a maximum of €75,000 p.a. per incapacitated individual.
  • Tax relief cannot be claimed in respect of funding received from HSE or local authority.

 

How to claim tax relief for Employing a Carer?

[If you’ve not registered your myAccount, you can follow Step 1 in my blog ‘Free guide on how to claim tax back in Ireland‘]

If you are jointly assessed, it is the assessable spouse (usually the one with the highest income) who needs to sign in and apply.

  • ‘Review Your Tax 2017-2020’ under the PAYE services section
  • ‘Tax Year’ from drop down box
  • ‘Submit’ the Income Tax Return (Don’t worry you are not submitting it right now!)
  • Click OK – for Notice to file an Income Tax Return
  • Click Next – for instructions – what you will need.
  • Pg 2. Personal details – complete and check details > Next
  • Pg 3. PAYE income page – complete and check details > Next
  • Pg 4. Non-PAYE income – complete and check details > Next
  • Pg 5. Tax credits & Reliefs
    • Select ‘You and your family’
    • Select ‘Employing a carer’
    • For whom was the carer employed – choose ‘self / partner or relative’ from the drop down box
    • Net cost of employing a carer – enter the carer’s Gross Pay before taxes.
    • Click Add
  • Place a tick in the box next to the tax credits to agree that you wish to claim them > Next
  • Pg 6. When you’re happy with the figures then tick the declaration box and your claim will be submitted!

 

4. Home Carer Tax credit

The Home Carer Tax Credit is usually claimed when one parent works and the other is home minding the child!

However, the person requiring care can be an older or incapacitated person.

Who can claim the Home Carer Tax credit?

1. married or in a civil partnership and jointly assessed. You cannot claim this tax credit if you are taxed separately.

and

2. you care for one or more dependent persons

and

3. the home carer cannot earn more than €10,400 annually.

 

 

What dependents qualify for the Home Carer Tax credit?

The dependent person you care for must be either:

  • a child and you receive the child benefit payment for him/her

or

  • a person aged 65 years +

or

  • a permanently incapacitated person (mental or physical disability)

 

The dependent person cannot be your spouse/partner.

 

Does the dependent person have to live in your home?

The dependent person can live either:

  • on the same property

or

  • next door in a neighbouring home or within 2 kilometres of your home

or

  • If caring for a non-relative, then they do have to live in your home.

 

What is the rate of Home Carer Tax Credit?

  • The Home Carer Tax Credit is € 1,600

 

  • The €1,600 rate is reduced for earnings between €7,200 and €10,400

0.50 cent is taken off the €1,600 rate for every €1 earned over €7,200 up to €10,400

 

  • If the home carer earns over €10,400; they cannot claim the Home Carer Tax Credit

Home carer earnings includes Jobseekers Benefit

Home carer earnings excludes Carers Allowance

 

  • The jointly assessed couple cannot claim any of the increased 20% Band which is €26,300 max (2020) and claim the Home Carer Tax credit together.

Home Carers Tax credit v 20% Increased Band

Examples - Couples with 2 incomes, deciding whether to claim the Home Carers Tax credit.
 YES -Home Carers
NO -20% Increased Band
NO -Home Carers
YES -20%Increased Band
YES -Home Carers
NO -20%Increased Band
NO - Home Carers
YES -20%Increased Band
Example 1
Income
TaxExample 1
Income
TaxExample 2
Income
TaxExample2
Income
Tax
Main earner
40,000
40,00044,000
44,000
Home earner7,200 7,200 7,2007,200
47,20047,20051,20051,200
20% Band44,3008,86044,3008,86044,3008,86044,0008,800
20% Increased Band NOT allowed2,900
580NOT allowed7,2001,440
40% Band2,9001,1606,9002,760
47,20047,20051,20051,200
Total Tax10,0209,4401162010,240
Home Carer Tax Credit-1,6000-1,6000
Tax payable8,420*9,40010,020*10,240
*Claiming the Home Carers Tax Credit is better in both of these examples

How to claim the Home Carer Tax Credit?

[If you’ve not registered your myAccount, you can follow Step 1 in my blog ‘Free guide on how to claim tax back in Ireland‘]

Only jointly assessed couples can claim this tax credit, it is the assessable spouse (usually the one with the highest income) who needs to ‘Sign in’ and apply.

  • ‘Review Your Tax 2017-2020’ under the PAYE services section
  • or ‘Manage Your Tax 2021’ if you wish to claim Home Carer Tax Credit for the current year.
  • ‘Tax Year’ from drop down box
  • ‘Submit’ the Income Tax Return (Don’t worry you are not submitting it right now!)
  • Click OK – for Notice to file an Income Tax Return
  • Click Next – you will get instructions on what you need
  • Pg 2. Personal details – complete and check details > Next
  • Pg 3. PAYE income page – complete and check details > Next
  • Pg 4. Non-PAYE income – complete and check details > Next
  • Pg 5. Tax credits & Reliefs
    • ‘You and your family’
    • ‘Home Carer Tax Credit’
    • ‘Type of dependent’ from the drop down list
      • Child
      • Permanently incapacitated person
      • Person aged 65+
      • Dependent relative living within 2km
    • Enter ‘PPSN of dependent’
    • Enter ‘Date of Birth of dependent’
    • Click Add
  • Place a tick in the box next to the tax credits to agree that you wish to claim them > Next
  • Pg 6. When you’re happy with the figures then tick the declaration box and your claim will be submitted!

 

5. Incapacitated Child Tax credit

Who can claim the Incapacitated Child Tax Credit?

  • The parent or guardian of a permanently incapacitated child/adult can claim the Incapacitated Child Tax Credit.
  • They must have custody of the child/adult. It is possible to claim for a stepchild, foster child or an adopted child.
  • They must maintain the child/adult at their own expense.
  • They need to get a doctor to sign Form ICC2 . This form must be submitted to Revenue when claiming the Incapacitated Child Tax credit.

 

What child/adult qualifies for the Incapacitated Child Tax Credit?

A permanently incapacitated (physically or mentally) child or adult will qualify if he or she is:

  • under 18 years

or

  • became incapacitated before 21 years of age – but is over 18 years

or

  • became incapacitated after 21 years of age while in full time education

or

  • became incapacitated after 21 years of age while in full time training

There must be an expectation that the adult will be unable to maintain themselves if they are over 18 years.

 

Does the incapacitated child have to live with you?

  • The child/adult doesn’t have to live permanently with you, the tax credit can be divided between carers.
  • Only one Incapacitated Child Tax Credit may be claimed per incapacitated child.

 

What is the rate of the Incapacitated Child Tax Credit?

  • The Incapacitated Child Tax Credit is € 3,300
  • You receive €3,300 for each incapacitated child.
  • It’s possible to claim this tax credit in the middle of the current tax year.
  • You cannot claim the Incapacitated Child Tax Credit and the Dependent Relative Tax credit both together.

 

How to claim the Incapacitated Child Tax Credit?

[If you’ve not registered your myAccount, you can follow Step 1 in my blog ‘Free guide on how to claim tax back in Ireland‘]

If you are jointly assessed, it is the assessable spouse (usually the one with the highest income) who needs to ‘sign in’ and apply for this tax credit.

  • ‘Review Your Tax 2017-2020’
  • or ‘Manage Your Tax 2021’ if you wish to claim Incapacitated Child Tax Credit for the current year.
  • Select ‘Tax Year’ from drop down box
  • ‘Submit’ for the Income Tax Return    (Don’t worry you are not submitting it right now!)
  • Click OK – for Notice to file an Income Tax Return
  • Click Next – you will get instructions on what you need
  • Pg 2. Personal details – complete and check details > Next
  • Pg 3. PAYE income page – complete and check details > Next
  • Pg 4. Non-PAYE income – complete and check details > Next
  • Pg 5. Tax credits & Reliefs
    • Select ‘You and your family’
    • Select ‘Incapacitated Child Tax Credit’
      • Number of dependent children – enter number
      • Number of incapacitated children – enter number  Note: A tax credit can be claimed for each incapacitated child
      • Name of child 1– enter incapacitated child’s name
      • Child’s PPS number – enter incapacitated child’s PPSN
      • Child’s Date of Birth – enter incapacitated child’s DOB
      • Nature of incapacity – enter incapacitated child’s condition
      • Is the incapacity permanent? –enter Yes or No
      • Supporting Documentation – Upload Form ICC2 which has been signed by the child’s GP.
      • Click Add
      • Place a tick in the box next to the tax credits to agree that you wish to claim them > Next
  • Pg 6. When you’re happy with the figures then tick the declaration box and your claim will be submitted!

 

6. Dependent Relative Tax credit

Who can claim the Dependent Relative Tax Credit?

You can apply for the Dependent Relative Tax Credit if you provide care to a relative at your own expense.

 

Which relatives qualify for the Dependent Relative Tax Credit?

The relative you claim for must be:

  • A relative (you or your partners) suffering with incapacity by old age or infirmity

or

  • A widow (your mother or your partners mother) or a widower (your father or your partners father). Widows/widowers do not have to be incapacitated.

or

  • A child (you or your partners) who lives with you; you depend on your child’s services because of your old age or infirmity

The relative doesn’t have to live in Ireland!

However, if you are claiming for your child on whose services you depend; that child must live in Ireland with you.

 

What is the rate of Dependent Relative Tax Credit?

  • The Dependent Relative Tax Credit is €245 (from 1.1.21) and €70 per annum in 2020.
  • However, to qualify for this Tax Credit the relative must not receive more than €15,740 annually (from 1.1.21) and €15,060 in 2020.
  • You can claim for more than one relative; providing they don’t exceed the income limit of €15,740.

 

How to claim the Dependent Relative Tax Credit?

[If you’ve not registered your ‘myAccount.ie’, you can follow Step 1 in my blog ‘Free guide on how to claim tax back in Ireland‘]

  • ‘Review Your Tax 2017-2020’ under the PAYE services section
  • or ‘Manage Your Tax 2021’ if you wish to claim Dependent Relative Tax Credit for the current year.
  • Select ‘Tax Year’ from drop down box
  • ‘Submit’ for the Income Tax Return (Don’t worry you are not submitting it right now!)
  • Click OK – for Notice to file an Income Tax Return
  • Click Next – you will get instructions on what you need
  • Page 2. Personal details – complete and check details > Next
  • Page 3. PAYE income page – complete and check details > Next
  • Page 4. Non-PAYE income – complete and check details > Next
  • Page 5. Tax credits & Reliefs
    • ‘You and your family’
    • ‘Dependent Relative Tax Credit’
    • ‘Number of dependents’ from the drop down list
    • Click Add
  • Place a tick in the box next to the tax credits to agree that you wish to claim them > Next
  • Page 6. When you’re happy with the figures then tick the declaration box and your claim will be submitted!

 

 

 

Geraldine Downey

Geraldine Downey

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