Income Tax Exemption for Child Minding Services

Total Tax Exemption

A tax exemption applies for income earned from child minding services. The income earned cannot exceed €15,000 per annum. This is specifically aimed at people who mind children in their own homes. This is a very good tax relief and means a stay at home spouse could earn up to €15,000 per annum tax free and the working spouse could still claim the Home Carer Tax Credit.

A brief summary of the rules is as follows:

– This exemption applies if the payments received in a tax year do not exceed  €15,000 per annum. The full amount is taxable in the normal way if the payments received exceed this amount.

– 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 child-minding 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.

Income qualifying for this relief is liable for a flat rate PRSI charge due of €253 for years up to 2012 and €500 from 2013 on.