Category: Expert Tax Library

Tax Credits – Home Carers

March 22, 2020

This tax credit was introduced to provide a measure of compensation to married couples where one spouse remains at home to look after family members in view of the increased 20% tax rate band for dual income couples.

 The tax credit is €1600 for 2020 & 2021. This tax credit must be claimed from the Revenue. In practice people often overlook this claim so it is worth checking to ensure that you are being allowed the benefit.

Where the home carer has other income a calculation needs to be done to see which is more beneficial i.e. the €1,600 tax credit or the increased 20% tax rate band.

If the home carer earns income of up to €7,200 during the tax year, the full tax credit may be claimed.

When the income exceeds €7,200, the tax credit is reduced by one half of the income of the home carer that exceeds this limit.

The spouse (the ‘home carer’) who works in the home must be looking after one or more dependent persons, i.e., a child for whom they are entitled to Social Welfare child benefit, a person aged 65 or over, or a person who is permanently incapacitated by reason of mental or physical infirmity and the qualifying person normally resides with the couple for the year.

The tax credit is not available to married couples that are taxed as single persons.

Share Dividends

March 9, 2018

You need to divide your share dividends into the following;

  • Dividends paid by Irish companies
  • Dividends paid by UK companies
  • Dividends paid by US companies
  • Dividends paid by Canadian companies
  • Other foreign dividends

Dividends paid by Irish companies

Many Irish companies pay dividends twice a year and will always deduct 20% tax at source from the gross dividend. If you are liable for tax at a higher rate you will pay tax on the gross dividend at the higher tax rate and be given a credit for the 20% tax already deducted.

PRSI and the USC are also due on the gross dividend and will be collected through the Self Assessment system if applicable.

Dividends paid by UK companies

You pay Irish tax on the net dividend received by you. No credit is allowed for any UK tax already deducted from the dividend payment. You must convert the net payment received to Euros and declare it on your Irish tax return form.

PRSI and the USC are also due on the dividend and will be collected through the Self Assessment system if applicable.

US, Canadian, & Other foreign dividends

The rules here are very complicated and the credit allowed by the Irish Revenue for foreign tax paid depends on whether or not we have a Double Taxation Treaty with the country from which the dividend is received. The basic rule is that the Irish Revenue will never grant a credit for foreign tax that exceeds the Irish tax liability on the foreign income and will never refund foreign tax to you.

There is a complex formula that must be applied to foreign dividends received from countries with which we have a Double Taxation Agreement. This involves grossing up of the net dividend received by you at an agreed rate published by the Revenue Commissioners for various countries. This rate recognises the tax already paid by the company abroad in earning the profits out of which the dividend is paid. Current Revenue practice seems to be that dividends received from the USA and Canada must be separately identified on your tax return form and dividends from all other countries get lumped together notwithstanding the different underlying tax rates that may apply to different countries.

Unless you have very substantial dividends from foreign countries (ignoring UK, USA & Canada) then the broadbrush approach applied to such income will not make any significant difference to your Irish tax liability.

Sometimes dividends received from foreign countries will suffer an Irish tax deduction on encashment. If this applies you will get a full credit against your Irish tax for this deduction. If you do not owe tax you will get a refund of the Irish tax deducted.

Where dividends are received from foreign countries where no double taxation agreement exists you will normally pay Irish tax on the net dividend received with no credit allowed for the foreign tax deducted from the dividend payment.

We can provide further advice on this matter by way of consultation.

Our Dividend Recording System

When recording information in this section you will be asked to identify the source of the dividend payments i.e. Irish, UK, or Foreign. The credit for Foreign Tax will be allowed in the calculation of your tax liability in the field Foreign Tax Deducted in the main income tax calculator.

 

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Tax Credit – Incapacitated Child

July 27, 2013

The amount of this tax credit is €3,300 for the tax years . The credit is available for each qualifying child.

The credit must be claimed from the tax office. The child must be under 18 years of age and be permanently incapacitated by reason of mental or physical infirmity.

If over 18 the child must have become permanently incapacitated before reaching the age of 21 years or when they were in receipt of full time education. When a credit is claimed for a child who has reached 18 years of age, the amount of the credit is restricted to the actual amount spent on the maintenance of the child if this is less than the maximum tax credit available for that tax year of assessment. A child includes a stepchild and an adopted child.

A medical practitioner must state on a Form ICC2 that there is a reasonable expectation the degree of incapacity will prevent the child from maintaining himself or herself over 18 in order to claim the credit.

Tax Credits- Home Service Charges

July 27, 2013

The tax relief for home service charges/ refuse collection charges has been abolished for tax year 2012 onwards.

You can tax relief for tax years up to 2011 based on the amount paid in the previous year. In other words there is no tax relief for charges paid in 2011 which would have been allowed in 2012.

Income tax relief was available for individuals who paid local authority and other service charges. Relief was given for service charges paid in full and on time in the previous calendar year. The amount of the tax relief was 20% of the amount paid.

The maximum amount which qualified for tax relief was €400 which equated to a tax credit of €80.

Tax Credits- Trade Union Subscriptions

July 27, 2013

This tax credit has been abolished from 2011 onwards.

The maximum amount of the tax credit available was €70 for 2008, 2009 and 2010.

Tax Credit for Private Rented Accommodation

July 27, 2013

You must have been renting a property as your residence on the 7th December 2010 to be allowed claim tax relief for later tax years.

The rate of tax relief is being phased out over the years 2010 to 2017. There will be no tax relief allowed after 2017.

Tax relief is due at the standard rate of tax (20%) for rent paid during the tax year in respect of a property used as your private residence. There is a ceiling on the amount of the tax relief that you receive. This ceiling depends on age (under 55 ) and if single or married/in a civil partnership.

The maximum tax relief for 2015 is as follows

Under 55 and single – €120

Age 55 + and single – €240

Under 55 and married – €240

Age 55 + and married – €480

The maximum tax relief for 2016 is as follows

Under 55 and single – €80

Age 55 + and single – €160

Under 55 and married – €160

Age 55 + and married – €320

Our tax calculators will automatically give the tax relief you are due when using our systems to complete your tax return form.

Tax Credit for Private Rented Accommodation

July 27, 2013

You must have been renting a property as your residence on the 7th December 2010 to be allowed claim tax relief for later tax years.

The rate of tax relief is being phased out over the years 2010 to 2017. There will be no tax relief allowed after 2017.

Tax relief is due at the standard rate of tax (20%) for rent paid during the tax year in respect of a property used as your private residence. There is a ceiling on the amount of the tax relief that you receive. This ceiling depends on age (under 55 ) and if single or married/in a civil partnership.

The maximum tax relief for 2015 is as follows

Under 55 and single – €120

Age 55 + and single – €240

Under 55 and married – €240

Age 55 + and married – €480

The maximum tax relief for 2016 is as follows

Under 55 and single – €80

Age 55 + and single – €160

Under 55 and married – €160

Age 55 + and married – €320

Our tax calculators will automatically give the tax relief you are due when using our systems to complete your tax return form.

Personal Tax Credits- Reliefs and Exemptions

July 27, 2013

There are numerous tax credits and tax claims which often get overlooked. We have divided these into three different categories as follows:

Personal Tax Credits

Allowed at the 20% tax rate as a credit against your income tax liability.

  • Home Carer’s Tax Credit
  • Mortgage / Loan Interest
  • Private Rented Accommodation
  • Medical Insurance Policies
  • Tuition Fees & Training Courses
  • Incapacitated Child
  • Age Credit
  • Blind Tax Credits
  • Incapacitated Child
  • Dependent Relative Credit
  • Seafarer’s Credit
  • Medical Expenses

Personal Tax Reliefs

Allowed as a deduction in calculating your taxable income, which means they are more valuable in terms of tax saved for top rate tax payers.

  • Nursing Home Costs
  • Employing a Home Carer
  • Contributions to Pension Scheme
  • Revenue Approved Permanent Health Benefit Schemes (PHI)
  • Employment & Investment Incentive Scheme
  • Film Investment Relief for 2015 – scheme has been reformed and moved to a film corporation tax credit model with effect from 1 Jan 2015.
  • Deeds of Covenant

Personal Tax Exemptions

There are not many of these around but we explain the most common ones.

  • Income Exemptions & Marginal Relief
  • Child Minding Services in your home
  • Rent-a-Room Relief Tax Free Income
  • Leasing Farm Land
  • Foreign Service Allowances for Employees of Government Agencies

Single Parent Tax Credit

July 27, 2013

This additional tax credit is available to single parents who have dependant children. The extra tax credit is equal to the single persons tax credit so that the combined tax credits for a single parent equal the normal married persons tax credit. In addition a qualifying single parent is entitled to a slightly increased 20% tax rate band.

With effect from 1 January 2014, the additional credit is only available to the principal carer of the child.

A dependant child, for the purposes of this additional tax credit is a child who at the beginning of the year of assessment is under 18 years of age or if over 18 is receiving full time education. A child who is permanently incapacitated by reason of mental or physical infirmity from maintaining himself will also qualify as a dependant child regardless of age provided they were so incapacitated before reaching 21 years of age. A child also includes a stepchild, a child whose parents have not married, a child who has been informally adopted and an adopted child.

This additional single parent tax credit is not available to an unmarried couple who are living together.

Widowed Persons Tax Credit

July 27, 2013

If you are widowed during the tax year, your tax status changes. The extent of this change depends on whether you were the person responsible for making tax returns or whether your deceased spouse was the person responsible for making tax returns.

If the surviving spouse was the person responsible for making the tax returns there is no particular change in the tax year when you are widowed. You continue to be entitled to the normal married persons tax credit and other associated claims e.g. home carer’s tax credit etc.

On the other hand if the surviving spouse was not the person responsible for making tax returns they are treated as a single person for the remainder of the tax year from the date they were widowed. You are entitled to both the single persons tax credit and an additional special tax credit for the year of bereavement, which brings the combined tax credit to the same amount as a married persons tax credit. If you have dependent children you do not get any additional tax credits apart from these in the year of bereavement. In addition you are entitled to the normal single persons 20% tax rate band for the remainder of the tax year.

In the years following bereavement, if you have dependant children you are entitled to both the single parent tax credit and an additional tax credit for each of the following 5 tax years. You are also entitled to a slightly greater 20% tax rate band than a single person.

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