Tax Tips

The Dependent Relatives Tax Credit Explained

Dependent Relative Tax Credit

 

The 2016 Census found that an astounding 195,263 Irish people are providing unpaid assistance to dependent relatives. Unfortunately, the majority of these carers do not realize they are eligible to claim a “Dependent Relative Tax Credit”, in order to compensate them for their care.

This complete guide will help you understand everything you need to know about the Dependent Relatives Tax Credit.

 

What Does The Dependent Relatives Tax Credit Offer?
Which Relations Qualify?
How Is Caring Defined?
How Can You Claim The Tax Credit Rebate?

 

What Does The Dependent Relative Tax Credit Offer?

The tax credit is €245 (up from €70 since January 2021), meaning your tax liability is reduced by €70. For example, if you have to pay taxes of €1000, but claimed the tax credit, you would only need to pay €755.

If you have already paid your tax, and afterwards realized you are eligible for the credit, you can then claim the tax paid back. You can do so for the previous four tax years, meaning you could be due a substantial rebate of €980.

However, if your dependent relative’s personal income exceeds €15,740 in 2021, or €15,060 in 2020, you are ineligible for the tax credit.

 

Which Relations Qualify?

Qualifying dependents include any blood relatives who rely on you to provide care, due to infirmity or old age. These can be either your own relatives or the relations of your spouse or civil partner. You can claim for up to five people in a given year.

However, the infirmity must be legally recognised by a medical practitioner. You may also claim the tax back if you maintain, at your own expense, the widowed parent of either yourself or your legally recognised partner. This is regardless of if the surviving parent was married, or in a civil partnership.

Additionally, you are able to claim the tax back if you are the one who requires care. In this instance, if you need your child, or the child of your legally recognised partner, to reside with you in order to provide care to you, you can then claim tax back.

 

How Is Caring Defined?

Caring is not solely defined as providing full-time physical aid, though this certainly is included. It also covers providing part-time assistance, or financial aid. In fact, the dependent does not need to live with you in order for the tax rebate to be claimed.

If you are providing financial maintenance, in the form of paying for a dependent relative’s expenses such as medical treatments like doctor bills, hospital stays or prescribed medication, you may still claim the credit. If they are living in an approved nursing home, and you contribute to the fees, you may also claim.

 

How Can You Claim The Tax Credit Rebate?

You can make a claim by contacting a tax rebate company like Irish Tax Rebates. All that is required is the dependant’s name, date of birth and the relationship to the client. If you’re paying tax under the self-assessment system, you can claim the credit by completing the ‘Dependent Relatives’ section on your yearly tax return.

To apply in 60-seconds, complete our online form today.