Bríd Smith
Question:269. Deputy Bríd Smith asked the Minister for Finance if he will clarify the situation in relation to the home carers tax credit (details supplied); and if he will make a statement on the matter. [14917/22]
View answerTuesday, 22 March 2022
Questions (269)
Written answers
I am advised by Revenue that the home carer tax credit may be claimed by jointly assessed married persons or civil partners where one spouse or civil partner (the ‘home carer’) cares for one or more dependent persons.
A dependent person includes an individual who, at any time in the year of assessment, is:
- a child in respect of whom the home carer, or his or her spouse or civil partner, is in receipt of child benefit;
- aged 65 years or over; or
- permanently incapacitated by reason of mental or physical infirmity.
The dependent person must normally reside with or in close proximity to the married couple or civil partners for the relevant year of assessment.
To obtain the full tax credit (€1,600 for the 2022 year of assessment), the home carer’s income for the year must not exceed €7,200. Carer’s Benefit and Carer’s Allowance received by the home carer is disregarded for this purpose.
Where the home carer’s income is over €7,200, the tax credit available is reduced by one half of the excess amount earned over this limit. The home carer tax credit will therefore not be available for the 2022 year of assessment where the home carer’s income exceeds €10,400.
In addition, a couple or civil partners cannot claim both the increased standard rate band for dual income couples and the home carer tax credit in the same year of assessment. In practice, Revenue will grant whichever relief will provide the most beneficial treatment to the couple.
The home carer tax credit can be claimed through myAccount or by completing an annual Income Tax Return. Taxpayers who do not have access to Revenue’s online services can submit a paper claim form. I am advised that where a person makes a claim for any tax credit, such claims are made on a self-assessment basis and Revenue’s ‘presumption of honesty’ principle, as set out in its Customer Service Charter, applies. This principle, however, is underpinned by periodic compliance checks to ensure the veracity of tax credit claims based on Revenue’s risk prioritisation framework.
Regarding the automatic application of the home carer tax credit, where this credit is claimed for a year of assessment, Revenue will automatically apply the credit in the following year in certain circumstances. This treatment applies in the scenarios outlined below:
1. Where the dependent person is a child in respect of whom either the home carer or his or her spouse or civil partner is in receipt of child benefit. This is subject to the following additional criteria being met:
1. the couple are married or in a civil partnership and are jointly assessed to tax;
2. Revenue records indicate that only one spouse or civil partner is in employment;
3. Revenue records indicate that the income of the unemployed spouse or civil partner is less than €7,200; and
4. Revenue receives confirmation from the Department of Social Protection that either the home carer or his or her spouse or civil partner is in receipt of child benefit.
Where the dependent person is a person aged 65 years or over, or a person who is permanently incapacitated due to mental or physical incapacity. This is subject to the following additional criteria being met:
1. the couple are married or in a civil partnership and are jointly assessed to tax;
2. Revenue records indicate that only one spouse or civil partner is in employment;
3. Revenue records indicate that the income of the unemployed spouse or civil partner is less than €7,200; and
4. there are no details of the home carer or his or her spouse or civil partner being in receipt of child benefit.
Preliminary End of Year Statements are made available to all employees and pension recipients and may indicate that there has been an underpayment of tax and USC in the year of assessment. In such cases the taxpayer should file an Income Tax Return to ensure that he or she has claimed all tax credits and deductions due, as this may impact the final income tax or USC position. Once a return has been submitted a Statement of Liability will issue, explaining how the underpayment will be collected.
The Preliminary End of Year Statements in respect of the 2021 year of assessment were made available in January of this year. As there are a number of reasons why an underpayment of income tax may arise, it is not possible to readily identify the number of cases where an underpayment related directly and exclusively to receipt of the home carer tax credit.
Detailed guidance in relation to the home carer tax credit can be found on Revenue’s website and Tax and Duty Manual Part 15-01-29, which are available using the links detailed below:
- www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/health-and-age/home-carer-credit/index.aspx, and
- www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-15/15-01-29.pdf.
Alternatively, taxpayers may contact the Revenue office which deals with their tax affairs for assistance in determining the full range of credits and reliefs which he or she may be entitled to claim, based on their personal circumstances. Contact details for various Revenue offices can be found at www.revenue.ie/en/contact-us/index.aspx.