Guide to the Incapacitated Child Tax Credit for 2024

Introduction

Raising a child with special needs presents unique challenges, and financial strain can often be one of the most significant hurdles. Fortunately, the Incapacitated Child Tax Credit offers essential support to alleviate some of these costs. This blog post provides an in-depth overview of the Incapacitated Child Tax Credit, covering its qualifications, application process, and important considerations to ensure you get the most out of this valuable tax relief.

What is the Incapacitated Child Tax Credit?

The Incapacitated Child Tax Credit is a tax relief designed to help parents or guardians of children who have permanent physical or mental incapacities. This credit acknowledges the extra financial burden that families face when caring for a child with special needs. By providing this credit, the Revenue aims to offer some relief and recognition of the additional costs involved in such caregiving.

This credit is available to both employees and self-employed individuals. It serves to offset some of the extra expenses that families might incur, from medical bills to specialized care, and ensures that the financial strain does not add to the challenges of raising a child with special needs.

Qualifying Criteria for the Credit

To be eligible for the Incapacitated Child Tax Credit, certain criteria must be met:

1. Nature of Incapacity: Your child must have a significant physical or mental incapacity that makes it unlikely for them to manage their own care, property, or finances as an adult. This means the incapacity must be severe enough to prevent the child from being able to support themselves financially through work, even with the help of treatments, devices, medication, or therapy.
2. Age of the Child:

1. • Under 18: If your child is under 18 years old and has a permanent incapacity, you can claim the credit.
   • Over 18: If your child is over 18, they must have become incapacitated before turning 21 or while in full-time education or training lasting at least two years.

3. Future Outlook: There must be a reasonable expectation that, if the child were over 18, they would not be able to maintain themselves financially. This is evaluated based on the severity of the incapacity and its impact on the child’s ability to work and support themselves.
4. Domiciliary Care Allowance or Disability Allowance: If your child receives these allowances, it is a strong indicator that they meet the criteria for the Incapacitated Child Tax Credit.

There is no upper age limit for claiming this credit. Even if your child reaches adulthood, you can continue to claim the credit as long as they continue to meet the qualifying criteria.

A doctor’s certificate or similar medical report should be submitted with all initial claims containing the following information:

• The date the incapacity first arose.
• The degree and extent of the incapacity.
• In the case of a child under the age of 18 years whether the child may be regarded as permanently incapacitated by reason of mental or physical infirmity i.e. the infirmity is such that, if the child were over the age of 18 years, there would be a reasonable expectation that the child would be incapacitated from maintaining himself or herself, and
• In the case of a child over 18 years at the commencement of the year, whether the child is permanently incapacitated by reason of mental or physical infirmity from maintaining himself or herself on an ongoing basis.

Factors which should be taken into account by a medical practitioner in deciding whether or not a child has a capacity to “maintain” himself or herself include:

• the severity of the mental or physical condition,
• the extent to which the child has the capacity for independent living,
• in the case of a child under the age of 18,

(i) the likelihood that the condition could, by the age of 18, be improved or ameliorated by any treatment, device, medication or therapy,

(ii) the extent to which the child, by the age of 18, would have the ability or potential to support himself or herself by earning an income from working,

(iii) the extent to which, by the age of 18, the child would have the capacity for independent living.

Who Can Claim the Credit?

Understanding who can claim the Incapacitated Child Tax Credit is essential for ensuring that the appropriate person receives the benefit:

1. Single Parent: If one parent is solely responsible for the child’s maintenance, that parent can claim the full credit amount.
2. Shared Custody: If the child is shared between parents, the credit can be split based on the proportion of financial support each parent provides. This means that parents who share custody can both claim a portion of the credit proportional to their contributions.
3. Non-Biological Guardians: If you are not the child’s biological parent but have legal custody and provide financial support, you are also eligible to claim the credit. It is important to complete the section of the form that indicates whether any other person is also maintaining the child.

The tax credit can also be claimed where a claimant has custody of an incapacitated child and maintains that child at his or her own expense (e.g. step-child, adopted child, foster child).

Where the child is maintained by one person only, that person is entitled to claim the full amount of the tax credit. However, where the child is maintained by more than one person, the tax credit is divided between them in proportion to the amount expended by each person towards the maintenance of the child.

Rate of the Incapacitated Child Tax Credit in 2024

For 2024, the Incapacitated Child Tax Credit has been increased to €3,500 per child per year. This is an increase from €3,300 in 2023, reflecting the government’s recognition of the rising costs associated with special needs care. If you have more than one child with additional needs, you can claim this credit for each qualifying child.

Overview of tax credit for 2024 to 2021

This increase in the credit rate is part of the government’s ongoing efforts to provide adequate support to families managing significant extra costs due to the care of a child with special needs.

Incapacitated Child Tax Credit and the Dependent Relative Tax Credit

A claimant may claim either this tax credit or the dependent relative tax credit but not both tax credits in respect of the same child. The dependent relative tax credit may be claimed where the incapacitated child lives with the claimant and, due to old age or infirmity, the claimant relies on the services of the incapacitated child.

How to Apply for the Incapacitated Child Tax Credit

Applying for the Incapacitated Child Tax Credit involves several steps. Here’s a detailed guide to help you through the process:

1. Complete Form ICC1: This form should be filled out with your personal details and information about the child.
2. Obtain Form ICC2: This form must be certified by your child’s doctor or consultant. The certification provides a professional declaration regarding the child’s incapacity and their inability to maintain themselves as an adult.
3. Submission Process:

1. • For PAYE Taxpayers: Submit your application online through Revenue’s MyAccount service. This is a convenient method that allows you to manage and track your claims electronically.
   • For Self-Employed Individuals: Apply through the ‘Incapacitated Child’ section on your annual tax return at the Revenue Online Service (ROS).
   • Alternative Method: If online submission is not possible, you can complete and mail both Form ICC1 and Form ICC2 to your local Revenue office.

Autism and the Incapacitated Child Tax Credit

One common concern among families is whether claiming the credit might negatively impact their child’s future or label them in a way that could have repercussions. It is important to note that claiming the credit does not have adverse effects on your child’s future.

If there are concerns about how this might affect your child, especially if their condition might change over time, consider submitting the forms manually with comprehensive supporting documentation. This approach allows Revenue to make a well-informed decision and provides peace of mind that your claim is handled properly.

When Does the Credit Stop?

The Incapacitated Child Tax Credit does not have an age limit. You can continue to claim it for as long as your child meets the qualifying criteria. If your child moves out of the family home or there is a significant change in circumstances (e.g., they start supporting themselves financially), you should inform Revenue to update your claim status.

If your child remains on Disability Allowancea and continues to meet the criteria for the credit, you can keep claiming it even as they reach adulthood.

Further Information and Resources

For more detailed information about the Incapacitated Child Tax Credit, including access to the necessary forms and application procedures, visit the Revenue website. The website provides comprehensive resources and updates on tax credits and reliefs available to support families with special needs.

In conclusion, the Incapacitated Child Tax Credit is a vital support mechanism for families with children who have special needs. By understanding the eligibility requirements, application process, and the impact of the credit, you can ensure that you make the most of this financial relief. Feel free to contact us and a professional tax advisor from the Anytime Tax Refund team will answer any questions about your eligibility or the application process.

Incapacitated Child Tax Credit FAQ

1. What is the Incapacitated Child Tax Credit?

The Incapacitated Child Tax Credit is a tax relief offered to parents or guardians of children with significant physical or mental disabilities. It is designed to help cover the additional costs associated with raising a child who cannot fully support themselves financially. The credit is available to both employees and self-employed individuals.

2. Who is eligible for the Incapacitated Child Tax Credit?

Eligibility requires:

• The child must have a permanent physical or mental incapacity that would prevent them from managing their own care, property, or finances as an adult.
• The incapacity must be such that the child is unlikely to be able to support themselves financially through work, even with the help of treatments, devices, medication, or therapy.
• The child must be under 18 or over 18 but incapacitated before turning 21 or while in full-time education or training for at least two years.

3. Is there an age limit for claiming the credit?

No, there is no age limit for claiming the credit. Parents can continue to claim the credit for their child regardless of their age, as long as the qualifying criteria are met. The credit can also be back claimed up to 4 years based on the child’s birth or diagnosis date.

4. Can both parents claim the credit if they share custody?

Yes, if both parents contribute to the child’s financial support, the credit can be split between them in proportion to their contributions. If only one parent maintains the child, that parent is entitled to claim the full credit amount.

5. Can non-biological guardians claim the credit?

Yes, non-biological guardians who have custody of and provide financial support for the child are eligible to claim the credit. It is essential to complete the section on the form regarding whether any other person is also maintaining the child.

6. What is the amount of the Incapacitated Child Tax Credit for 2024?

For 2024, the Incapacitated Child Tax Credit is €3,500 per child per year. This is an increase from €3,300 in 2023. Families with more than one child with additional needs can claim this credit for each qualifying child.

7. How do I apply for the Incapacitated Child Tax Credit?

To apply:

1. Complete Form ICC1 with your details.
2. Obtain Form ICC2, which must be certified by your child’s doctor or consultant.
3. Submit the forms:
   • For PAYE taxpayers: Apply online through Revenue’s MyAccount service.
   • For self-employed individuals: Claim via the ‘Incapacitated Child’ section on your annual tax return at the Revenue Online Service (ROS).
   • Alternative: Mail both forms to your local Revenue office.

8. What if I’m concerned about how claiming the credit might impact my child’s future?

There is no negative impact on your child’s future from claiming the credit. If you have concerns, especially if your child’s condition might change, you can submit the forms manually with comprehensive supporting documentation. This approach helps ensure that your claim is reviewed thoroughly and provides peace of mind.

9. What happens if my child moves out or my circumstances change?

If your child moves out of the family home or if there is a significant change in circumstances (e.g., they start supporting themselves financially), you should notify Revenue to update your claim status. The credit should only be claimed while the child meets the qualifying criteria and financial support is provided.

10. Where can I find more information about the Incapacitated Child Tax Credit?

For further details, including how to access and complete the necessary forms, visit the Revenue website. The site provides comprehensive information on the Incapacitated Child Tax Credit and other available tax reliefs and supports.