Background

At the Wednesday Club this week, Frances lead the discussion on Home Carer’s Tax Credit and how it is applied.

This initially started as a House Wife’s tax credit, for the stay at home mum minding the children.  But we more and more find that a Married couple will be due this for a partner who has been made redundant and is not working – and this can be either the Mother or Father of the house.

You may also be due Home Carers Tax Credit where you have been on Maternity Leave  and not receiving employment income for that reason.

How it works

If you are married and have children (or care for other dependents) then you may be eligible for the Home Carers Tax Credit.
To claim the full tax credit the home carer’s income (and this includes any Welfare payments) must not exceed €5,080 for the year.  If the income is between €5,250 and €6,750 then you will be due a portion of the tax credit.
You cannot claim this home carer’s tax credit and the increased standard rate band for dual income couples.  If the Married Standard Rate Cut Off Point (€45,400 for 2009) is sufficient to cover the combined income of both spouses then this issue doesn’t arise.  We can help you determine which is better for you and when Revenue assess the application they will automatically grant the more beneficial treatment. 
This tax credit can be claimed for the last 4 years at a rate of €770 for 2006 and 2007 and €900 for 2008 onwards.
One point that is often overlooked is that if you got the Home Carers tax credit in one year you can still claim it the following year even if the home carer’s income exceeded the €5,080 threshold.
It can be slightly complicated determining if you are eligible for the Home Carers tax credit but we can let you know Revenue’s rules for defining a dependent person and we can also calculate yours and your spouse’s incomes for the last 4 years and determine the most beneficial tax treatment for each of the last 4 years.