Tax Credits and Reliefs

Incapacitated Child Tax Credit

The tax credit can be claimed where a claimant proves that he or she has living at any time during the tax year any child who is permanently incapacitated either physically or mentally from maintaining himself/herself.

Conditions to Qualify:

  • In order to qualify the child must:
  • be under 18 years of age and permanently incapacitated either physically or mentally, or
  • if over 18 years of age at the commencement of the tax year and is permanently incapacitated either physically or mentally from maintaining himself or herself and had become so permanently incapacitated before reaching 21 years ,or had become so permanently incapacitated after reaching 21 years, but while he or she has been in receipt of full-time education at any university, college, school or other educational establishment, or while training full-time for a trade or profession for a minimum of two years, or is any child for whom the claimant has custody of and maintains at his or her own expense and who is permanently incapacitated.
  • Where more than one child is permanently incapacitated, a tax credit may be claimed for each child.

Relief Due

This tax credit is worth €3300.  Please see http://www.revenue.ie/en/tax/it/tax-chart.html for more information on tax credits.

How to apply:

Fill out the form available at this link: http://www.revenue.ie/en/tax/it/credits/incapacitated-child-credit.html.  The details needed for the form are: child's name, date of birth, nature of incapacity, medical certificate in certain circumstances, (only required with a first claim where it is not obvious that the incapacity is of a serious and permanent nature).  The doctor will be required to write that the incapacity prevents the child from being wholly independent and will continue to do so after the child reaches 18 years of age.

Send the claim to your local Revenue office which can be found here: http://www.revenue.ie/en/index.html

This credit may also be claimed using PAYE Anytime.

Additional Information

Where more than one child is permanently incapacitated, a tax credit may be claimed for each child.

Where the incapacity can be corrected, treated or relieved by the use of any treatment, device, medication or therapy the child is not regarded as permanently incapacitated. Examples are diabetes which can be treated with insulin, coeliac diseases, hearing impairment which can be corrected by hearing aid etc.

Tax relief on medical expenses

A tax refund at your standard rate is available for money spent on certain medical expenses. You can claim relief on the following expenses:

  • Doctor’s visits
  • Educational psychological assessments for a dependent child
  • Hospital or nursing home costs
  • Medication costs which have not been covered by the Drugs Payment scheme
  • Physiotherapy
  • Speech and language therapy for a dependent child
  • Supply and repair of medical or surgical appliances used on medical advice
  • Parents of oncology patients may claim tax relief on the following under the heading of health expenses:
  • Telephone – If a child is treated at home, you may claim a flat rate of €315 for telephone rental and calls where the expenses are directly connected with the treatment of the child.
  •  Hygiene products – If you have to use gloves or aprons for your child’s care, you can claim up to €500 per year.
  • Travel – If you use a private car, the cost of travel can be claimed at €0.27 per mile or €0.17 per kilometre. No relief is available for car parking fees. Hold on to evidence of hospital visits, for example your child’s appointment card.
  • Overnight accommodation – You can claim for payments made for overnight stays in a hospital, hotel or bed and breakfast near the hospital where your child is a patient, if such an overnight stay by you is necessary for the treatment of the child. Note: Claims for the cost of minding brothers or sisters of the patient while you are at the hospital are not allowable.
  • Treatment abroad – If qualifying health care is only available outside Ireland, you can claim reasonable travelling and accommodation expenses for your child. If the child’s condition requires someone to travel with them, the expenses of one person accompanying the child may also be allowed.

How to claim: You can claim tax relief on medical expenses through the Revenue Online Service (ros.ie) or by using a Med 1 form. You should complete a Med 1 form at the end of the tax year. If you are claiming for dental expenses, you can get a Med 2 form from your dentist, who should complete it. Submit forms Med 1 and 2 together. If you find that you have exceptionally large expenses throughout the year, you may be able to claim a refund each quarter. No refund is given for expenses which could be reimbursed from other sources, for example from the HSE or a private health insurance company.

You can make claims retrospectively for the previous four years. You can only claim for medical expenses if you have receipts to prove your claim. Do not send your medical receipts with your Med 1 or 2 form. However, you must keep your medical receipts for six years because Revenue may investigate your claim.

VAT refunds

You may claim a refund on Value Added Tax (VAT) for certain aids and appliances used by your child to help with independent living and working. This includes most aids to daily living and communication aids. It does not include goods designed for leisure purposes. You can claim refunds on:

  • Braille books
  • Commode chairs
  • Communication aids
  • Domestic aids, for example, eating and drinking aids
  • Lifting seats and specified chairs
  • Hoists and lifts, including stairlifts
  • Walk-in baths

VAT refunds are not allowed on:

  • Rented aids and appliances

How to apply: Form VAT 61a is available from the Revenue Commissioners or can be downloaded from the Revenue website at this link: http://www.revenue.ie/en/tax/vat/forms/vat61a.pdf.  An invoice clearly stating the VAT element of the total amount paid must be included with your application.

Post to: Revenue Commissioners FREEPOST, Central Repayments Section, M: TEK II Building, Armagh Road, Monaghan. Tel: 047 62100 Lo-call: 1890 606 061 revenue.ie

Tax reliefs for people with a visual impairment

Parents cannot claim a Blind Person’s Tax Credit for children who are blind, but you can claim the Incapacitated Child Tax Credit – see above. If your child is paying tax and has a certain level of visual impairment, they may claim a Blind Person’s Tax Credit. Your child will need to get a certificate from an ophthalmic surgeon certifying that his or her eyesight falls within prescribed limits in order to qualify for the credit. The value of the credit in 2014 is €1650.

If your child pays tax and has a trained guide dog, they can apply for the Guide Dog Allowance. In 2014, the value of the allowance is €825. It applies at your child’s highest rate of tax. To claim the allowance, your child must have a letter from Irish Guide Dogs for the Blind confirming that they are a registered owner.

How to apply: Fill in a Claim for Blind Person’s Tax Credit and Guide Dog Allowance form available here: http://www.revenue.ie/en/tax/it/forms/blind-tax-credit.pdf and send it to your local tax office.

Tax exemptions on trust funds

The Irish tax system allows for tax exemptions in respect of certain trust funds that have been set up to benefit someone who is permanently and totally incapacitated. There are strict rules about the type of trust involved and how it is administered. The money must be raised from the proceeds of public subscriptions. This generally means monies raised from a public appeal or charitable events.

If your child is permanently incapacitated, and a public appeal raises the money, such a trust fund may be set up for them. The legal terminology “permanently incapacitated” in this context means that the child is totally and permanently unable to maintain himself or herself as a result of physical or intellectual disability.

Trustees cannot have any connection with the beneficiary of the trust – this means that neither you nor any other family members can be trustees if such a trust is set up for your child. The trustees must remain independent and objective in decisions arising from the operation of the trust to ensure that they act in the beneficiary’s best interest.

If your child is to be exempt from tax, the money from the trust fund must be their sole or main source of income. Income from social welfare payments is not counted when deciding if the trust fund is the main source of income.

Both your child and the trustees must declare this income to the Revenue Commissioners when making their annual tax returns. Setting up a trust fund has complex legal implications, so it is important to get professional legal advice. In addition, it is very important to discuss the tax implications with an accountant and the Revenue Commissioners.

Deeds of covenant: A deed of covenant is a legally binding written agreement stating that one person agrees to pay another an agreed amount of money without receiving any benefit from that person. Depending on the tax situation of each party to the deed, both of them may be able to gain tax benefits.

The only people who can receive payments under a deed of covenant are:

  • Permanently incapacitated adults
  • Permanently incapacitated minors (that is, under 18s) – but not from their parents
  • People aged over 65

Until your child is aged 18 or over (or, if under 18, is married) you may not claim tax relief on a covenant made in his or her favour as they would legally be regarded as a minor. Tax relief can be claimed, however, if other family or friends are in a position to covenant money to your minor child. The exact tax saving depends on the amount of tax paid by the person making the payment (the covenantor) and on the amount of the income of the person receiving the payment (the covenantee)

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