Tax relief for paying parents weekly

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bluetoff

Registered User
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I have heard the rumour but I am not too sure if there is any truth in this. Are you entitled to tax credits,and have them backdated if you have been handing up a weekly wage to your parents if living at home. If so how do I claim, or under what section does this tax credit come under.
 
I don't know the answer to that, but the flip side of getting the reliefs would be that your parents would most likely be liable to tax on the newly declared income.

z
 
Maybe be rent relief is what you are thinking about. Remember that your parents should declare any Rent-a-Room income even if it is under the threshold, So submitting the Rent 1 form could highlight this to the revenue. Just be aware of the implications.
 
Are we talking about a payment under a covenant ?

You would get tax relief on that and if your parents income is under the exemption limits they wouldn't be liable for income tax ?
 
bluetoff said:
weekly wage to your parents if living at home..
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do you mean rent?

if so you may be entitled to a rental credit (currently 2006 of max €330) you may only go back 4 years to 2003 however
 
as already stated your parents will have to declare this, however the rent a room relief is much higher than the tax credit, so unless your parents are renting rooms to more than three people it could work out ok, unless of course the rent is very expensive.
 
deem said:
as already stated your parents will have to declare this, however the rent a room relief is much higher than the tax credit, so unless your parents are renting rooms to more than three people it could work out ok, unless of course the rent is very expensive.
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Has anybody done this?
Would my parents have to declare it even if i keep it under the level?
And would there own income affect this?

Sorry for all the questions, just really dont understand how this works
 
Has anybody done this?
Not to my knowledge but I'm sure if you look hard enough you'll find someone who has done pretty much anything/everything.

Would my parents have to declare it even if i keep it under the level?
Yes. Keeping it under the threshold just means that they aren't liable for any tax on the money, they must still declare to remain tax compliant. Lots of info on the rent a room scheme available on AAM and

And would there own income affect this?
Their eligibility for the rent a room scheme?
No. Check out the official details on RaRS for full information on all requirements/conditions.
I'm not sure if thats what this question was in relation too though so feel free to clarify if referring to something else.

Remember if you do go this way to claim the additional Rent Allowance (additional tax credits) available to you as mentioned above.
 
Satanta said:
Has anybody done this?
Not to my knowledge but I'm sure if you look hard enough you'll find someone who has done pretty much anything/everything.

Would my parents have to declare it even if i keep it under the level?
Yes. Keeping it under the threshold just means that they aren't liable for any tax on the money, they must still declare to remain tax compliant. Lots of info on the rent a room scheme available on AAM and here.

And would there own income affect this?
Their eligibility for the rent a room scheme?
No. Check out the official details on RaRS for full information on all requirements/conditions.
I'm not sure if thats what this question was in relation too though so feel free to clarify if referring to something else.

Remember if you do go this way to claim the additional Rent Allowance (additional tax credits) available to you as mentioned above.
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Thanks for your reply Satanta
I stil feel its a bit dodgy, because why isnt everybody claiming it if there isnt any issues.
When asking has anybody done this? I meant any AAM users, just to know their experience of it.
So from my understanding of your reply, If my parents declare it, it wont affect their tax position.
 
why isnt everybody claiming it if there isnt any issues?
Well, most don't pay rent to parents so it'd be tax evasion in this case and a serious offence (although the only gain is the €330 rent allowance gained). Also, the real reason I'd assume, most don't know about it.

When asking has anybody done this? I meant any AAM users, just to know their experience of it.
True, I also would be interested to hear if it has been done.
It is a lot of work for a gain of €330. (Careful trying to claim back years if you did previously pay rent. Your eligible to claim back for 4 years, but your parents were not under the RaRS so may be liable for costs on those years)

So from my understanding of your reply, If my parents declare it, it wont affect their tax position.
As long as they stay under the RaRS threshold level then yes (from my own understanding of it. Happy to admit I've no personal experience, but read all the documents on it and it appears quite clear and obvious).
 
Thats my problem with it, it seems so clear, that i feel there is an underlying catch
 
I believe that most working, adult children, still living at home would contribute something to the household. Here's hoping anyway!! Whether this would qualify as rent or not is another question, I would have thought it was more to do with food/bills etc.

It is a question that has crossed my mind. If a parent applies for the rent a room scheme and the child pays under the threshold then what's the harm in the child getting tax credits for it? However, I'd assume that Revenue have that one covered. Interesting though.
 
Thats what i was wondering do the revenue have this covered.
Id love to know, dont want to apply for this if there is a catch somewhere hidden.
 
liteweight said:
It is a question that has crossed my mind. If a parent applies for the rent a room scheme and the child pays under the threshold then what's the harm in the child getting tax credits for it? However, I'd assume that Revenue have that one covered. Interesting though.
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As far as I know it's perfectly legitimate for parents to claim rent a room relief and the child to claim the rent tax credit as long as the transactions are above board.
 
liteweight said:
If a parent applies for the rent a room scheme and the child pays under the threshold then what's the harm in the child getting tax credits for it? However, I'd assume that Revenue have that one covered. Interesting though.
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I don't see why they would need to have this "covered". Technically the parents own the house, the tenant (in this case their child) is living in the house and is paying rent....
If it were a niece, nephew or friend of the family the system would allow it, I can't see why the same would not apply to their own child (that's far from saying that it IS allowed, since when does logic apply to these matters :p).

I have never seen any document which states that it can't be done. The [broken link removed] does list some items not allowed (rent to LAs or SAs for over a lease over 50 years) but nowhere mentions children's contributions to parents.

If you are concerned about it before taking any action you could query it with citycentrepaye@revenue.ie. They should be able to give you official confirmation of whether it is available or not.
 
thanks for all your help
i will contact them and post back here with the answer
 
Just one catch which comes to mind is if your parents are in receipt of a means tested social welafre benefit any income they are receiving from you would be counted as means and possibly reduce their payment
 
Revenue will most likely just point you at the rules/guides rather than giving advice. If you need advice contact an accountant or tax advisor. I'm neither but believe that it's all perfectly legitimate once the transactions are above board and are not being returned to the "tenant".
 
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