Tax credit-all or part of year?

F1fan

Hi,
Please could someone assist me. I am asking on behalf of a friend who requested a P21 for 2013. She was then informed she owed €2000. Following enquiries, it seems that when she informed revenue in Oct 13 that she no longer wished to claim a single parent tax credit, her credits were adjusted and she paid the correct tax (approx €50 net) per week for the remainder of the year.
However, Revenue now state that because the credit was removed in Oct it is not valid for any part of the year.
Can this really be the case? Thanks in advance.

adrianw

I would be in agreement with Revenue's position, as the tax credit is not apportioned for part of a year.
As she was cohabiting for part of the year, she would not be entitled to the credit for any of the year.

relax carry on

F1fan wrote: »

Hi,
Please could someone assist me. I am asking on behalf of a friend who requested a P21 for 2013. She was then informed she owed €2000. Following enquiries, it seems that when she informed revenue in Oct 13 that she no longer wished to claim a single parent tax credit, her credits were adjusted and she paid the correct tax (approx €50 net) per week for the remainder of the year.
However, Revenue now state that because the credit was removed in Oct it is not valid for any part of the year.
Can this really be the case? Thanks in advance.

It depends. Was she actually entitled to claim the credit at all in 2013? Did she fulfill the criteria for it for even one day in 2013. If she did then she was entitled to it for the full year. If she didn't then she shouldn't have had it at all

http://www.revenue.ie/en/tax/it/leaflets/it9.html

F1fan

relax carry on wrote: »

It depends. Was she actually entitled to claim the credit at all in 2013? Did she fulfill the criteria for it for even one day in 2013. If she did then she was entitled to it for the full year. If she didn't then she shouldn't have had it at all

http://www.revenue.ie/en/tax/it/leaflets/it9.html

Hi,

Yes, she moved in with partner in October, and cancelled the credit immediately, which was reflected in her payslip for the remainder of the year.

gerrybbadd

F1fan wrote: »

Hi,

Yes, she moved in with partner in October, and cancelled the credit immediately, which was reflected in her payslip for the remainder of the year.

The credit would have been removed initally on a week 1 basis, which means she would have paid more tax from that date onwards, but with no retrospective reference to the removal of the credit.

When the balancing statement then issued, the entire year was taken into account, resulting in the underpayment.

If she told Revenue to remove the credit, its an all or nothing kind of situation - there's no apportionment

adrianw

relax carry on wrote: »

It depends. Was she actually entitled to claim the credit at all in 2013? Did she fulfill the criteria for it for even one day in 2013. If she did then she was entitled to it for the full year. If she didn't then she shouldn't have had it at all

http://www.revenue.ie/en/tax/it/leaflets/it9.html

Hi Relax,

I know from previous posts you are usually right, but I'm not sure on this one.

Sec 462B para 2(c) of the Finance Act from 2013 says the credit will not apply to couple who are cohabiting.

If your above assertion is correct, surely all one has to do is break-up on the December 29th every year and reconcile on Jan 1st?

relax carry on

adrianw wrote: »

Hi Relax,

I know from previous posts you are usually right, but I'm not sure on this one.

Sec 462B para 2(c) of the Finance Act from 2013 says the credit will not apply to couple who are cohabiting.

If your above assertion is correct, surely all one has to do is break-up on the December 29th every year and reconcile on Jan 1st?

You are correct that it can't apply to cohabiting couples.The situation you outline would be spotted easily.
However in genuine cases where there is a change in circumstances during the year and all the conditions of the credit had been met up to that point, then the credit should apply for the whole year. It would be removed from the start of the next tax year. I'm not sure if this applies to the new single parent credit from 2014, as its been a while since I've had to deal with those sorts of cases.

Sunny Dayz

I was actually in this position myself and had a long argument with Revenue over it. As this tax credit is not apportioned over the year, you either get the full credit or you don't, Revenue can't apportion it over the no of days you are technically a single parent. I argued with them that for part of the year I fulfilled the qualifying conditions for the tax credit, I was entitled to the credit and it wasn't my problem that they don't apportion it. It was 2011 when I stopped being a single parent, at the end of the arguing I had the full tax credit for 2011 and no single parent tax credit for 2012.


Taken from their leaflet IT9 page 3:
Each qualifying claimant can claim the full tax credit for a dependent child provided the qualifying conditions are
met and the child resides with each claimant for at least part of the
relevant year.

F1fan

Thanks for all your help everyone