can we claim home carer's tax credit

[mabama]

Hope someone can enlighten me here as I'm not sure how this works.
We have 2 children (born in 2010 and 2011), I work full time, on a good salary, my DH has been self-employed since start of 2010 but his profit is very low (less then €5000 a year) as he looks after the children most of the time. Kids have been attending crèche part-time for last 2 yrs but only 2-3 days a week and in recent months 5 mornings a week. Are we still eligible to claim home carer's tax credit for my DH? I've never thought of that as I assumed if kids go to crèche even part time and DH has his own business (no matter how low his income is) we wouldn't be eligible but reading info on revenue website, there is nothing about full-time care of children. We are struggling with money at the moment so I'm reviewing our finances and if we could claim home carer's credit for last 4 year, it would be like winning a lotto! Any advise would be very appreciated!

 

[DB74]

You are eligible to claim the Home Carers Credit BUT ...

If you claim the credit then you are not entitled to the increased standard rate band given to married couples. This means that as a married couple you can only earn €41,800 at the 20% tax band with ALL income over and above that amount taxable at the 41% rate irrespective of who earns it

So unless your total household income is under roughly €45,000 there is no benefit in you claiming the Home Carers Credit

eg

Your Income = €41,800
Spouse Income = €5,000
Total Income = €46,800

Without Home Carers Credit
PAYE payable:
= €46,800 @ 20%
= €9,360 less credits €4,950 (€1,650 x 3)
= €4,410

With Home Carers Credit
PAYE payable:
= €41,800 @ 20% + €5,000 @ 41%
= €8,360 + €2,050
= €10,410 less tax credits (€4,950 + €810)
= €10,410 - €5,760
= €4,650

so you would actually be slightly worse off claiming the HCC in this instance.

You would need to run the figures to see exactly which is better but if you earn more than the €41,800 it's probably not worth your while claiming the HCC at all unfortunately

 

[Mrs Vimes]

Regardless of how much you earn the maximum on which you can be taxed at the lower rate is €41,800.

What actually matters when calculating whether home carer's is beneficial is the earnings of the lower paid spouse - in general, if you are using all your rateband (€41,800) then once he is earning over about €3,800 you are better off with increased rateband for him rather than home carer's. If you are not using all your rateband then he can use some of it and also get home carer's.

Fortunately, if you claim it Revenue automatically allow it only if it is beneficial so there is no down-side to trying

To clarify, how many hours are spent caring for the children is irrelevant, it is due based only on whether there are qualifying children and income level of lower-earning spouse.