Practical ways parents can save tax
The following is taken from an Image Magazine article by Colette Sexton, news correspondent at The Sunday Business Post, which Lisa Kinsella, Tax Director, contributed on how to scrape back some cash from the expensive business of parenting.
They might be cute, but they’ll cost you. It is hardly breaking news to reveal that having children is an expensive business. Estimates put the current cost of raising a child from birth until completion of their third level education at just below €250,000.
At the moment, parents are preparing for back to school costs which are estimated to be about €600 for primary school children and €1,200 for secondary school children. This is in addition to all of the other costs associated with offspring, including feeding, watering, clothing, and, of course, childcare. The average weekly cost of childcare in Ireland is €174.16.
Despite repeated demands from many quarters for cheaper childcare, politicians are not coming up with the goods. Last week, the independent ministers said they were campaigning for a €1,000 “granny grant” for grandparents who help out with childcare in the 2019 Budget, which would be self-assessed and not means tested. It was an insult to hard working parents out there who want and need affordable childcare.
While parents out there wait for government to come up with policies that might actually help to solve the childcare crisis (I wouldn’t hold my breath) there are a range of tax benefits that parents can avail of to ease financial pressure.
Here are some of those benefits:
Single parent tax credit
Single parents might be entitled to claim the single person child carer credit. Lisa Kinsella, tax director at audit, tax and business consultancy Crowe said: “In general, the credit is given to the person whom the child lives with for the whole/greater part of the year (more than six months). To be eligible the child must be under the age of 18 or in full time education, during which time they are supported and maintained by the parent claiming the credit.” For 2018 the tax credit is €1,650.
Home carer tax credit
“We often find that families are not only taking care of their own children but also elderly parents,” Lisa said. In circumstances where one spouse decides to remain at home to take care of a child for whom child benefit is paid, an elderly relative or a dependent person with a disability, the Home Carer Tax Credit may be claimed. The tax credit for 2018 is €1,200. Stay at home parents are entitled to claim this credit.
Incapacitated child tax credit
Parents may claim an annual tax credit of €3,000 for children that are permanently incapacitated. This covers illnesses such as Cystic Fibrosis and acute autism.
“In our experience diagnoses are often slow to obtain and in many cases a child will be diagnosed as having suffered with the illness from birth. In these circumstances, the credit can be backdated for a period of 4 years, resulting in a maximum tax saving of €5,280 for families,” Lisa said.
Both the Incapacitated Child Tax Credit and the Home Carer Credit can be claimed in conjunction with one another provided the conditions for both are met.
Medical expenses for dependents
Parents are entitled to claim tax relief for medical expenses paid for their children and other dependents. Tax relief is granted at a rate of 20 per cent. Common items on which tax relief can be claimed include doctor visits, prescriptions, hospital treatment, speech and language therapy, qualifying dental, such as orthodontic treatment. Nursing home fees paid also come under the medical expenses tax relief heading.
“An important point to note is that Revenue will grant tax relief during the tax year in question, in respect of nursing home fees, provided the individual paying the expenses makes contact with Revenue to request this arrangement,” Lisa said. “This should ease the cash flow burden for families paying these expenses as relief would be granted to them in real time as opposed to having to wait until the end of the year to claim the relief.”
Medical insurance tax credit
“Another area where we see credits unclaimed is in respect of tax relief on medical insurance premiums paid by an employer on behalf of their employee and the employee’s family,” Lisa said. A tax credit of €200 is available for adults and €100 for children per year.
Child care services
For individuals with families of their own who choose to mind children in their home, they are entitled to earn up to €15,000 yearly tax free, provided that they mind no more than three children and have notified the H.S.E that they are providing the service.
Third level education
Most undergraduate students attending publicly funded third level education are not required to pay tuition fees. However, where a child embarks on a postgraduate course for which a parent is required to pay tuition costs, tax relief may be granted to the parent at a rate of 20 per cent.
If it all seems a bit complicated, it is not but you do need to ensure you claim back what is rightfully yours. Lisa said: “In our experience parents are unaware of the existence of the range of benefits available to them. The majority of these reliefs can be easily claimed through Revenue’s online service “My Account”.”
So off you go to Revenue.ie and enjoy some cashback from those little cherubs.
They might be cute, but they’ll cost you. It is hardly breaking news to reveal that having children is an expensive business. Estimates put the current cost of raising a child from birth until completion of their third level education at just below €250,000.
At the moment, parents are preparing for back to school costs which are estimated to be about €600 for primary school children and €1,200 for secondary school children. This is in addition to all of the other costs associated with offspring, including feeding, watering, clothing, and, of course, childcare. The average weekly cost of childcare in Ireland is €174.16.
Despite repeated demands from many quarters for cheaper childcare, politicians are not coming up with the goods. Last week, the independent ministers said they were campaigning for a €1,000 “granny grant” for grandparents who help out with childcare in the 2019 Budget, which would be self-assessed and not means tested. It was an insult to hard working parents out there who want and need affordable childcare.
While parents out there wait for government to come up with policies that might actually help to solve the childcare crisis (I wouldn’t hold my breath) there are a range of tax benefits that parents can avail of to ease financial pressure.
Here are some of those benefits:
Single parent tax credit
Single parents might be entitled to claim the single person child carer credit. Lisa Kinsella, tax director at audit, tax and business consultancy Crowe said: “In general, the credit is given to the person whom the child lives with for the whole/greater part of the year (more than six months). To be eligible the child must be under the age of 18 or in full time education, during which time they are supported and maintained by the parent claiming the credit.” For 2018 the tax credit is €1,650.
Home carer tax credit
“We often find that families are not only taking care of their own children but also elderly parents,” Lisa said. In circumstances where one spouse decides to remain at home to take care of a child for whom child benefit is paid, an elderly relative or a dependent person with a disability, the Home Carer Tax Credit may be claimed. The tax credit for 2018 is €1,200. Stay at home parents are entitled to claim this credit.
Incapacitated child tax credit
Parents may claim an annual tax credit of €3,000 for children that are permanently incapacitated. This covers illnesses such as Cystic Fibrosis and acute autism.
“In our experience diagnoses are often slow to obtain and in many cases a child will be diagnosed as having suffered with the illness from birth. In these circumstances, the credit can be backdated for a period of 4 years, resulting in a maximum tax saving of €5,280 for families,” Lisa said.
Both the Incapacitated Child Tax Credit and the Home Carer Credit can be claimed in conjunction with one another provided the conditions for both are met.
Medical expenses for dependents
Parents are entitled to claim tax relief for medical expenses paid for their children and other dependents. Tax relief is granted at a rate of 20 per cent. Common items on which tax relief can be claimed include doctor visits, prescriptions, hospital treatment, speech and language therapy, qualifying dental, such as orthodontic treatment. Nursing home fees paid also come under the medical expenses tax relief heading.
“An important point to note is that Revenue will grant tax relief during the tax year in question, in respect of nursing home fees, provided the individual paying the expenses makes contact with Revenue to request this arrangement,” Lisa said. “This should ease the cash flow burden for families paying these expenses as relief would be granted to them in real time as opposed to having to wait until the end of the year to claim the relief.”
Medical insurance tax credit
“Another area where we see credits unclaimed is in respect of tax relief on medical insurance premiums paid by an employer on behalf of their employee and the employee’s family,” Lisa said. A tax credit of €200 is available for adults and €100 for children per year.
Child care services
For individuals with families of their own who choose to mind children in their home, they are entitled to earn up to €15,000 yearly tax free, provided that they mind no more than three children and have notified the H.S.E that they are providing the service.
Third level education
Most undergraduate students attending publicly funded third level education are not required to pay tuition fees. However, where a child embarks on a postgraduate course for which a parent is required to pay tuition costs, tax relief may be granted to the parent at a rate of 20 per cent.
If it all seems a bit complicated, it is not but you do need to ensure you claim back what is rightfully yours. Lisa said: “In our experience parents are unaware of the existence of the range of benefits available to them. The majority of these reliefs can be easily claimed through Revenue’s online service “My Account”.”
So off you go to Revenue.ie and enjoy some cashback from those little cherubs.
