The Revenue has issued advice to childminders that they must declare their income, even if earnings are below the tax threshold or they are entitled to an exemption.
Tax experts say that even if they have no other income, childminders may need to register for self-assessment and submit a tax return. If they have other income, this could impact on their PRSI position too.
According to Christine Keily, senior tax consultant with www.taxback.com: “Any income an individual receives is, in the first instance, taxable i.e. this would include payment for babysitting, minding neighbour’s children, cleaning etc.
“There is, however, a specific relief available to childminders once certain conditions are satisfied and the childminding income does not exceed €15,000 in a tax year (this limit refers to receipts from the activity rather than profits). If the income exceeds €15,000 no relief is available under this provision.
“In order for the relief to apply, the childminder is required to notify the local city or county Childcare Committee that the services are being provided on or before the filing date for the tax return for the relevant year. In addition, in order to avail of this relief the individual must elect to claim the relief. This relief is made via submission of a tax return.”
Taxback.com say that while some income is exempt from income tax and the Universal Social Charge, it is not exempt from PRSI unless it is less than €5,000 a year.
Ms Keily added: “Yesterday’s e-brief basically reiterated the fact that people claiming this relief are chargeable persons and therefore must submit an annual tax return. If such individuals have not yet registered for self-assessment, they should do so now.
“Individuals claiming this relief may continue to claim mortgage interest relief as an owner-occupier of the property even though it is used partially for business purposes.
“In addition, the income qualifying under this section is not taken into account in determining an individual’s entitlement to home carer’s credit.
“The fact that Revenue issued this reminder would suggest that they do intend to clamp down on individuals who have been availing of this relief but not meeting their obligations under Self-Assessment,” said Ms Keily. She suggested that they reconcile their position without delay.