Stay-at-home parents will be able to keep an additional €100 following an increase in the home carer’s tax credit.
In line with increases in previous years, the Government again increased the credit, bringing it up to €1,200 from €1,100 previously. The credit is of assistance to over 80,000 families where one spouse works primarily in the home to care for children or other dependants, and is designed so that these families are not penalised where someone stays at home to mind the kids .
As a tax credit the increase means that the new amount will be wiped off a family’s tax bill. It means, for example, that someone earning €50,000 and paying €10,000 in tax will see their tax bill drop to €8,800 by virtue of claiming the credit, down from €8,900 last year.
The credit also allows the stay-at-home partner to work up to a limit, but there was no change in the limit this year. It means that the stay-at-home partner can earn up to € 7,200 a year without impacting on their partner’s ability to claim the credit.
If the stay-at-home partner’s income is in excess of the limit the credit may still be of use as long as it doesn’t exceed € 9,400. The difference between the actual income and € 7,200 is calculated and then halved.
However, not every stay-at-home partner should claim the credit. It all depends on how much the working partner earns as you can’t claim the increase in the standard-rate band and the tax credit at the same time.
