For those seeking care at home, there are many financing options. Read on to find out more about tax relief.
Understanding Homecare Costs
Homecare costs will vary from provider to provider. They will also depend on when an individual needs the care. For example, overnight, weekend and Bank Holiday work are likely to command a higher rate.
Under certain circumstances, there are ways you can reduce the costs of paying for care by up to 40 percent through tax relief. There are certain rules and dependencies around when and how you can claim tax reliefs for care.
We’ve made a simple step-by-step guide to help you understand it all.
Key Facts About Tax Relief on Homecare Costs
The rules around tax relief apply whether you take on a carer for another family member or for yourself. You then have the choice of employing a carer directly or through an agency that employs carers. You can apply for tax relief under either circumstance.
It’s worth bearing in mind that employing a carer yourself comes with certain responsibilities. These include taking care of your employee’s tax and social insurance contributions. If you use Comfort Keepers instead, then we will take care of all this for you.
Who is Eligible for Tax Relief?
If the person receiving the care is a family member, they must be a spouse, civil partner or child. They could also be a relative through marriage or civil partnership.
The person who receives the care has to be in a totally incapacitated state during the tax year. This means they must have a disability and be in need of a carer.
At some point, the Revenue Commissioners may ask for a medical certificate as confirmation of the type of disability. However, you do not need to send one with your initial application form.
You will not be able to claim tax relief if your carer only performs housekeeping duties. Those in receipt of an Incapacitated Child Tax Credit or a Dependent Relative Tax Credit are also ineligible for tax relief.
The Revenue Department does not allow you to claim relief for any funding you get for employing a carer from a local authority or the HSE.
How Does Homecare Tax Relief Work?
Standard rates of income tax are 20 percent and 40 percent in Ireland. Put simply, there is an earnings threshold after which you will pay the higher of these two rates. This threshold varies depending on whether you are single or married.
When claiming tax relief for homecare costs, you can claim at your highest tax rate but on the lower of these two figures:
- The actual cost you pay for homecare
- The maximum deduction of €75,000
If you want to claim relief, you must do it every tax year. To find more about tax relief on employing a home carer, head here. To apply for tax relief, fill out this form.
We Are Always on Hand to Help You
We recognise that understanding the rules around tax relief can be bewildering at times.
Whatever your circumstances, you can be sure that we have the experience to help you through all aspects of homecare funding.
Even if you are not working or paying taxes, you could still receive cash back from the Revenue department. This can happen through other members of your family up to a maximum of €75,000 and at their marginal tax rate.
If you or a loved one needs any type of homecare, get in touch with us now to find out how we can help.