Your Questions: What is the tax relief available if we pay for a full-time carer?
Q: My aunt’s health has been declining for some time and she now needs a full-time carer in her home. My cousin and I are willing to share the cost equally, which will be approximately €55,000 per year. I know there is tax relief available for this, but will only one of us be allowed to apply for it? And how much would we be entitled to?
A: From what you have outlined it appears that both you and your cousin should be eligible to claim tax relief for the cost of employing a carer for an incapacitated relative.
This is allowed at your marginal rate of tax, according to Eileen Devereux, commercial director, Taxback.com. The relief granted is proportionate to the split of the carer expenses – which will be 50:50 in your case. The deduction will be the lower of either: the actual cost of employing the person, or €75,000 per year. As the cost to both you and your cousin is below €75,000, the relief will be applied to the €55,000 of costs that you both incur, Ms Devereux explained.
You do not mention whether you are going through an agency to employ this carer or are going to do so directly.
If you go through an agency then the obligation is on the employer to make the necessary income tax, universal social charge (USC) and Pay Related Social Insurance (PRSI) deductions through the PAYE system when paying the carer. If you employ the carer directly, you will have to register as an employer and make income tax, USC and PRSI deductions.
Q: My son will be returning to live in Ireland in February. He is 45 and has been living abroad for the past 10 years. I am worried that the age loadings will make his health cover unaffordable. Can these loadings be avoided?
A: If your son takes out health insurance cover within nine months of returning to Ireland, he will avoid all age loadings and will just have to pay standard rates.
This is because he left the country prior to May 1, 2015. But he must re-join within nine months of returning to avail of this exemption. The insurer will require him to provide proof that he has been living abroad. He will still have to serve the standard waiting periods that apply to all new members, but no age loadings.
Q: Five years ago, following the birth of my third child, I made the decision not to go back to work and to instead stay at home and look after the kids. Since then I have earned a tiny income of maybe €1,000 to €2,000 a year by doing some ‘mystery shopper’ work. A friend, who is in a similar job situation to me, told me she got a tax refund because she informed the Revenue of her-stay-at-home parent status. Will this apply to me?
A: What you and your friend are most likely referring to is the home carer credit. It is available to someone who cares for a dependant in their own home.
The credit can be awarded to you if you are married or in a civil partnership and jointly assessed for tax purposes.
A dependant can be classified as a child who qualifies for child benefit, according to Eileen Devereux, Commercial Director, Taxback.com.
As the annual income you receive is below the current annual income threshold of €7,200 (and below the 2015 income threshold of €5,080), it sounds like you would be eligible for the relief in full.
The credit amounts for the last four years are as follows: €1,200 for 2018; €1,100 for 2017; €1,000 for 2016; and €810 for 2015.
Budget 2019 saw this tax credit increase by €300 to €1,500. As you have never applied, you can backdate your refund application to four years.
Q: I have a mid-level health insurance plan (Irish Life Health Benefit Plan) and also a cash plan with HSF. Do I really need both?
A: As both products don’t really overlap, Dermot Goode of TotalHealthCover.ie recommends that you should keep both in place.
The Irish Life Health plan provides good cover for both public and private hospitals subject to a medium level of excess, he says.
The HSF plan covers the cost of outpatient expenses such as dental, optical, GP, and consultants’ fees which are not covered by the health insurance plan, so both complement each other.
Also, the HSF plan will also pay cash allowances towards all hospital day-case treatment and hospital admissions which will subsidise the cost of any excesses that have to be paid on the health insurance plan. Cash plans are not health insurance plans and are not designed to cover all your inpatient expenses, hence the need for quality health insurance as well.