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Home Carer’s Tax Credit – Increase in 2017

A Home Carer’s Tax Credit is a tax credit given to married couples or civil partners (who are jointly assessed for tax) where one spouse or civil partner works in the home caring for a dependent person.

The tax you are liable to pay is calculated as a percentage of your income. A tax credit is deducted from this to give the actual amount of tax that you have to pay. A tax credit has the effect of reducing your payable tax by the amount of the credit.

Budget 2017:
It was announced in Budget 2016 that the Home Carer’s Tax Credit given to married couples or civil partners where one spouse or civil partner works in the home caring for a dependent person will increase from €1000 to €1,100 in 2017.

Rules:
A Home Carer’s Tax Credit can be claimed when:

• The married couple or civil partners are jointly assessed for tax
• One spouse or civil partner works in the home caring for one or more dependent people
• The home carer’s own income is below €7,200 in the tax year you are claiming for.
• You can claim a reduced credit if the carer’s income is between €7,200 and €9,400.

Carer’s Allowance is not taken into account when determining the home carer’s income but it is a taxable source of income. This means that if you are claiming Carer’s Allowance, it will make up part of your jointly-assessed income.

Who is a dependent person?
A dependent person is a:

• Child for whom Child Benefit is payable
• Person aged 65 or over
• Person with a disability that requires care
• A dependent person you are caring for cannot be a spouse or civil partner. They can however, be a relative by marriage, or someone for whom you act as a legal guardian.

Does a relative have to live with us to be a dependent person?

The dependent person normally has to live with you and your spouse or civil partner in the tax year in order to quality for Home Carer’s Tax Credit.

A dependent person who is a relative can be cared for outside your home. However, if the person is not living with you they must live next door in a neighbouring residence, or on the same property, or within 2 km of your home. In addition, there must be a direct communication link between you (for example, a telephone line or alarm system).

Rates:

The Home Carer’s Tax Credit for 2017 is €1,100.

If the home carer earns income of up to €7,200 in their own right for the tax year, the full tax credit may be claimed.

Reduced tax credit:

However, if the income exceeds €7,200, the difference between the actual income and €7,200 is calculated and then halved. The Home Carer’s Tax Credit is then reduced by that amount. The following table gives examples of how the tax credit is calculated for different levels of income.

If the home carer’s income is €9,400 or more during 2017 then you cannot claim the tax credit.

How to Apply:

You can claim Home Carer’s Tax Credit by contacting Revenue by telephone or using PAYE On-line service.

You can also complete Home Carer’s Tax Credit IT 66 claim form (pdf).

Where to Apply:

Applications for the Home Carer’s Tax Credit should be made to Revenue.