My elderly mother is nearing 90 years of age and requires full-time care at home. If my sister and I employ a care giver for €600 per week, how much will it cost us both in real terms?
Is there anything else we need to know?
Mr PE
Care in old age can be a real source of stress for families, largely because of the significant cost involved. Anyone you ask will tell you that, given the choice, they would prefer to be cared for in their home. For medical reasons, that is not always possible but even where it is, it almost inevitably involves a significant financial commitment.
That can be a deal breaker for the older person themselves, many of whom will be living on a State pension. That is why, as in your case, family often looks at the possibility of bearing the cost and spreading it among several family members.
The good news then is that tax relief is available for whoever is bearing the cost. Better again, most unusually, that relief is available at a person’s higher, or marginal, income-tax rate. Most tax reliefs these days are allowable only at the standard rate of income tax – think medical expenses – but the cost of care for a person who is “totally incapacitated due to physical or mental infirmity” is granted at the marginal rate.
So you cannot claim relief if you are simply looking for someone to come in and do purely housekeeping duties.
In terms of relief, it does not matter whether you are employing the carer directly yourself or are engaging a carer through one of the several agencies offering the service on a commercial basis.
For many, the first port of call is the Health Service Executive (HSE). In my experience, the HSE is very committed in this area but, as always, resources are an issue. You may find that you are initially approved only for very limited support for budgetary reasons. It is still worth doing as, once your mother is on the radar, and especially as her care needs increase, she will be more likely to benefit from extra care hours as resources or budget become available.
Obviously you will not qualify for relief on HSE-allocated hours – even where they are provided by commercial care agencies, as most are – because you are not out of pocket on that expense.
That aside, you can claim relief up to a maximum of €75,000 for the cost of care. That €75,000 is the cost of caring for the individual – not the cost to you. So if more than one person is contributing to the cost of caring for an individual, they cannot each claim up to €75,000
The €600 a week you and your sister are considering will fall well within that limit even though it does amount to a substantial financial commitment – €31,200.
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Each of you is entitled to claim relief on the amount they contribute. It does not have to be an even split or anything like that. If both of you are paying tax at the higher 40 per cent rate, the relief is granted at that rate.
That would cut the weekly cost of the care to €360 and the annual cost between you to €18,720.
If one or other pays tax only at the standard 20 per cent rate, the relief for them is granted at that standard rate even though the other person may be able to claim at the higher rate. That might determine who contributes what in a family setting.
At the standard rate of tax, the weekly cost falls from €600 to €480 and the annual cost to you is €24,960.
Each contributor to the cost of care will need to make a claim for the relief by completing an income tax return. If doing this online on Revenue’s myAccount service, go to the tax credits and reliefs page and click on “You and Your Family” and then on “Employing a carer”.
You may be asked to fill out a Form HK1, on which you give your details, those of the person being cared for and those of the carer, including their name and PPS number.
Remember, if you are employing a carer yourself, you are considered their employer and will have to register as such and deduct PAYE, PRSI and USC from their pay. Failure to do so will likely see you denied the relief. If you go through an agency, obviously they do all of this.
Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street Dublin 2, or by email to dominic.coyle@irishtimes.com with a contact phone number. This column is a reader service and is not intended to replace professional advice
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