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.
A Home Carer’s Tax Credit can be claimed when:
Carer’s Allowance or Carer's Benefit are not taken into account when determining the home carer’s income but they are taxable sources of income. This means that if you are claiming Carer's Allowance or Carer's Benefit, it will make up part of your jointly assessed income.
A dependent person is a:
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.
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).
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.
Income of Home Carer
|Tax credit in 2016||Reduction in tax credit in 2016|
|€7,200||€1,100||Nil - The full tax credit is due|
|€975||€7,450 - €7,200 = €250 ÷ 2 = €125|
|€7,950||€725||€7,950 - €7,200 = €750 ÷ 2 = €375|
|€8,200||€600||€8,200 - €7,200 = €1,000 ÷ 2 = €500|
|€8,450||€475||€8,450 - €7,200 = €1,250 ÷ 2 = €625|
|€8,700||€350||€8,700 - €7,200 = €1,500 ÷ 2 = €750|
|€8,950||€225||€8,950 - €7,200 = €1,750 ÷ 2 = €875|
|€9,050||€175||€9,050 - €7,200 = €1,850 ÷ 2 = €925|
|€ 9,200||€100||€9,200 - €7,200 = €2,000 ÷ 2 = €1,000|
|Nil||€9,400 - €7,200 = €2,200 ÷ 2 = €1,100|
You cannot claim the Standard Rate Cut-Off Point for dual income couples and the Home Carer’s Tax Credit. Your local tax office will help you to determine which is better for you.
Applications for the Home Carer's Tax Credit should be made to Revenue.
If you have a question relating to this topic you can contact the Citizens Information Phone Service on 0761 07 4000. The Phone Service will operate Monday to Friday, 9am to 6pm during January 2017. You can also visit your local Citizens Information Centre.