Tax Credits & Reliefs >> Income Tax Exemption for Child Minding Services

Tags: tax exemptions, child minding, PRSI charge

A tax exemption applies from 2006 for income earned from child minding services. The income earned cannot exceed €10,000 for 2006, and €15,000 for the years 2007 onwards. This is specifically aimed at people who mind children in their own homes. A brief summary of the rules is as follows:
The exemption applies if the payments received in a tax year do not exceed €10,000 for the year 2006 and thereafter €15,000 per annum. The full amount is taxable in the normal way if the payments received exceed the relevant threshold for the year involved. 
The service cannot be provided to more than 3 children at a time.
The exemption must be claimed in the annual tax return. The claim must be supported by evidence that the service provider has notified the appropriate person, recognised by the health service executive, that they are providing childminding services. The notification can be made at any time during or after the tax year to which it relates provided that it is before the 31st October of the following year. 
A separate notification must be made in respect of each tax year where the exemption is claimed. 
A claim for relief under this section does not effect a persons entitlement to mortgage interest tax relief in respect of their principle private residence or the capital gains tax exemption when selling your private residence.
Payment up to €10,000 for 2006 and thereafter €15,000 to which this section applies will not be taken into account in determining entitlement to the home carer tax credit.
This is a very good tax relief and means a stay at home spouse could earn up to €15,000 per annum tax free ( for 2006 €10,000 ) and the working spouse could still claim the Home Carer Tax Credit of €900. 
Income qualifying for this relief is also exempt from the Income Levy. However there is a flat rate PRSI charge due of €253.

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