More and more people are opting for caring for their elderly loved ones at home. . With proven benefits for your loved one and your family, home care services are an ideal solution when a family member prefers to stay in familiar surroundings.
If you’re caring for a loved one or family member, the idea of employing a full-time professional care worker is an appealing solution. It’s also an excellent alternative to residential care for older people seeking to retain their independence.
Of course, the cost of care can impact your finances, but there is a way to make home care even more affordable. You can apply for tax relief on invaluable home care services, giving you peace of mind that your family member or loved one is receiving the best care.
In this article, we’ll look at how tax relief works to help you keep your loved ones well cared for in their own home.
Who can claim tax relief?
If you employ a care worker, you could be entitled to claim tax relief. For example, you could need home care for a relative, . or it could be home care services for yourself. Eligibility for tax relief also extends to anyone you’ve looked after as their legal guardian.
Tax relief is only available where you or your relative or family member is disabled or lives with a mental or physical condition.
Are there restrictions on claiming tax relief?
If you’ve decided to apply for tax relief, you should be aware that several restrictions are in place.
For example, your care worker must provide essential home care services, including help with dressing, bathing, feeding, movement and medication. Tax relief is not available for housekeepers or companions.
In addition, you won’t be able to claim home care tax relief if you already receive Incapacitated Child Tax Credit or Dependent Relative Tax Credit.
Tax relief doesn’t cover services provided by the HSE. However, you can claim reimbursement for services provided by commercial and charitable organisations that provide home health care.
How much will I be reimbursed?
You need to be aware of two benchmarks when claiming tax relief on home care. Effectively, you can claim relief on the actual cost of employing your care worker, or up to €75,000 for each family member or relative receiving care. You’ll receive tax relief on whichever amount is lower.
Say, for example, you employ a care worker receiving €4,000 a month. You’ll receive tax relief on the actual cost of care which totals €48,000 over 12 months. Alternatively, if the cost of care rises above the €75,000 threshold, your tax relief is capped at the maximum of €75,000.
Who can pay for home care?
If you can’t manage the cost of care alone, you may turn to a family member for help. However, if two or more people are paying for care for a loved one, the total tax relief received can’t be more than the €75,000 maximum limit.
Make sure to keep a detailed record of who pays what towards the cost of care, as calculations for the tax relief granted to each person will correspond to the amount they’ve paid. So, for example, if you pay 50% of a family member’s care, you’ll receive half of the tax relief.
Let’s say you and your sister have decided to pay jointly for home care for your mother. You each agree to pay €4,000, so your total annual costs are €96,000. Since this exceeds the maximum relief cap, you’ll receive €75,000 in tax relief, which will be split equally between you. Therefore, you’ll be able to claim €37,500 as personal tax relief for your mother’s home care.
Will I have any tax obligations?
If you hire a care worker through Caremark, we’ll be happy to support you with a free consultation and all the information you need to make a claim.
How can I claim?
You can apply for tax relief directly through myAccount or by completing Form HK1 and returning it to your revenue office during the tax year or when the tax year ends. You’ll need to make your claim within four years of the tax year to which your claim relates.
Caremark can help!
At Caremark, we’ll support you every step of the way when you need to employ a carer for a loved one. Our tax relief calculator will help you see at a glance how much you could save on home health care services, and our free consultation will set your mind at rest. To find out more about Caremark home care services, contact us today.