Most people are unaware of the Dependent Relative Tax Credit, which compensates people for financially supporting a relative.
This complete guide will help you understand everything you need to know about the Dependent Relatives Relief (DRR)
How Much Is The Dependent Relative Tax Credit Worth?
What Relatives Qualify?
What is Meant By ‘Financial Support’?
Are There Any Other Tax Reliefs Regarding Relatives?
How Do I Claim A DRR Rebate?
How Much Is The Dependent Relative Tax Credit Worth?
In 2021, DRR increased by 350%, from €70 to €245. Dependent Relative Relief is a credit that reduces your tax liability for the year. For example, if you have to pay taxes of €1000, but claimed the tax credit, you will only need to pay €755.
You can also claim back tax you have already paid over the last four years if you haven’t already used the Dependent Relative’s Tax Credit. This means that if you financially supported a direct relative between 2018-2021, you could be due a rebate of €455.
You can claim for up to five relatives in any given year. This equals a total tax credit of €1,225 for 2021 and/or a rebate of €2,275 over the last four years for anyone in these circumstances.
However, if your dependent relative’s personal income exceeds the following, you are ineligible for the tax credit:
2021: €15,740
2020: €15,060
2019: €14,753
2018: €14,753
What Relatives Qualify?
Specific relatives who are dependent on you for financial support.
They must be directly related either to you or your spouse/civil partner and be any of the following:
- Unable to support themselves due to incapacity (old age or infirmity);
- Widowed father or mother;
- Surviving parent of a civil partnership;
- A child who lives with you to care for you (due to your old age or infirmity)
You can also claim the credit if you maintain, at your own expense, the widowed parent of either yourself or your spouse/civil partner regardless of whether the parent was in a marriage or a civil partnership themselves.
The relative is not required to live in Ireland but must meet the above criteria.
What is Meant By ‘Financial Support’?
If you can demonstrate that you provided €245 or more to a relative to help support them in 2021 (or €70 in previous years), you can claim the Dependent Relative’s Tax Credit. This support must be at your own expense, and the relative’s income must not exceed the amounts specified above.
Are There Any Other Tax Reliefs Regarding Relatives?
If your spouse/civil partner lives abroad, you may also be eligible for additional tax credits via Aggregation Relief.
How Do I Claim A DRR Rebate?
Irish Tax Rebates have made this process easy. All that is required is the dependant’s name, date of birth, and your relationship to them.
To apply in 60-seconds, complete our online form today.
