Stay at home mom

[Ham Slicer]

Does the above not relate to staying at home to look after an elderly or infirm relative? The OP seems to think it refers to looking after one's children.

The home carers tax credit is also available if staying at home to look at your child, but as I said it can't be claimed in addition to the increased rate band. It's one or the other.

 

[ClubMan]

As I said - don't confuse the Carer's Benefit/Allowance SW payments to carers of ill/disabled individuals with the Home Carer's Tax Credit which is not restricted to carers of ill/disabled individuals and is available to parents who look after their children full time (with certain conditions such as those outlined by Ham Slicer).

Ham Slicer - isn't it the case that the increased standard rate band issue might only preclude claiming the credit for the remainder of this year for example but that next year if one parent is not working and is minding the child(ren) at home then the increase in the standard rate band is no longer an issue (only one person working) so the credit may be claimed? I know that I found this a bit confusing when we had our kid last year but ultimately we received the credit from last year even though my wife was working for part of the year with me on 42% and her on 20% in case that's relevant...

 

[Ham Slicer]

Ham Slicer - isn't it the case that the increased standard rate band issue might only preclude claiming the credit for the remainder of this year for example but that next year if one parent is not working and is minding the child(ren) at home then the increase in the standard rate band is no longer an issue (only one person working) so the credit may be claimed? I know that I found this a bit confusing when we had our kid last year but ultimately we received the credit from last year even though my wife was working for part of the year with me on 42% and her on 20% in case that's relevant...

The HC credit and increased rate band is on an annual basis, so you need to claim one or the other for the full year.

It's possible that you weren't actually entitled to the HC credit in 2005 as you wife had some income. If the income was in excess of €6,620 there was no entitlement to the HC credit. Not sure of your income figures but it may have been worthwhile claiming the increased rate band as an alternative to the HC credit.

Indeed if you look at this years tax credit cert and see that you have the HC credit and increased rate band, it is wrong. You will end up with a €770 underpayment for the year (ignoring everything else).

The HC credit is worth a max of €770 pa. The increased rate band is worth a mas of €9,000 (€41K - €32K) @22% = €1,980.

It's up to the taxpayer to elect for which method they want.

 

[ClubMan]

Thanks - I'm still a bit confused but if there is any discrepancy then I'm sure that it'll get sorted when I get around to requesting a P21 balancing statement for 2005 once I get some additional info together (MED1 stuff).

 

[polaris]

I think Clubman is correct here. The relevant information leaflet:

[broken link removed]

states that "if the couple claims the increased Standard Rate Cut Off Point for dual income couples, the Home Carer's tax credit will not be due"

My reading of this and the worked examples on the leaflet is that if the home carer has no income for the year, the SRCOP on the working spouse will be 41K and the Home Carer's tax credit is also due

However, if the home carer also has an income of below €6,620, they are now a dual income couple and choose the more beneficial of claiming the Home Carer's tax credit or receiving an increase in the SRCOP to a value between €41,000 - €47,620.

 

[Tenacious]

Ham Slicer, you have got it wrong on this point. The increased standard rate band for a married couple is €41,000 + income of other spouse to a max of €23,000. A single persons standard rate cut off in 2006 is €32,000, but a married couple with one income is €41,000.

You are right where you said that a married couple cannot claim both the increased standard rate band and the home carer's tax credit. However if there is just one income, then there is no standard rate band to increase! And the Home Carer's Credit is claimed. The couple will be taxed as follows: €41,000 at 20% and Balance of Income at 42%. If the husband's taxable income is say €50,000, then the gross tax is €11,980. (It should be noted that in calculating total income no account is taken of the Carer's Allowance payable by the Department of Social, Community and Family Affairs).

If the spouse has already earned over €6,620 so far this year, it will be more beneficial for the couple not to claim the Home Carer's tax credit for this year and opt for the increased standard rate band. (i.e. no further action presuming the couple are jointly assessed).

Clubman, on a separate point, it is now possible to claim for Medical Expenses Relief for 2005 and order a P21 Balancing Statement for 2005 using the full suite of ROS on www.ros.ie . No need to fill out Med1's and get signatures (or Med2's for that matter!). P21's usually take about ten working days to issue.

 

[Ham Slicer]

Ham Slicer, you have got it wrong on this point. The increased standard rate band for a married couple is €41,000 + income of other spouse to a max of €23,000. A single persons standard rate cut off in 2006 is €32,000, but a married couple with one income is €41,000.

Sure that's exactly what I said.

I know how SRCOP works.

You are right where you said that a married couple cannot claim both the increased standard rate band and the home carer's tax credit. However if there is just one income, then there is no standard rate band to increase! And the Home Carer's Credit is claimed. The couple will be taxed as follows: €41,000 at 20% and Balance of Income at 42%. If the husband's taxable income is say €50,000, then the gross tax is €11,980. (It should be noted that in calculating total income no account is taken of the Carer's Allowance payable by the Department of Social, Community and Family Affairs).

I said that aswell. The point I was making is that Revenue will sometimes also incorrectly grant the HC aswell.

If the spouse has already earned over €6,620 so far this year, it will be more beneficial for the couple not to claim the Home Carer's tax credit for this year and opt for the increased standard rate band. (i.e. no further action presuming the couple are jointly assessed).

I said that aswell

Thanks for clearing all that up

 

[Carpenter]

Clubman, on a separate point, it is now possible to claim for Medical Expenses Relief for 2005 and order a P21 Balancing Statement for 2005 using the full suite of ROS on www.ros.ie . No need to fill out Med1's and get signatures (or Med2's for that matter!). P21's usually take about ten working days to issue.

I signed up for ROS last month and got a P21 Balancing Statement with handsome cheque attached well with the ten working days, was well impressed with the service.

 

[polaris]

If the spouse has already earned over €6,620 so far this year, it will be more beneficial for the couple not to claim the Home Carer's tax credit for this year and opt for the increased standard rate band. (i.e. no further action presuming the couple are jointly assessed).

It the home carer is earning >€6,620 the Home Carer's tax credit is no longer an option as this is the cut-off point for this tax credit. In this case the couple will automatically received the increased SRCOP up to a maximum of €23K.