Earned Income Credit

massagegirl

Some advice please, I am self employed and jointly assessed with my husband who is PAYE. Are all self employed people entitled to claim the Earned Income Credit? I run a very small business and can usually work my way around the return but I am trying to establish on ROS whether I should check this box or not as it makes a significant difference to my liability when I check it. Please excuse my ignorance!

spoiler

Yes you can claim the Earned Income Credit.

Stratvs

Yes the EI credit is open to anyone with Earned Income ( as opposed to passive income such as rents ) who doesn't qualify for the PAYE Tax Credit. So you as a self-employed person would be entitled to claim it. The maximum value of the credit is currently €1,150.

So if your income is say €10,000 taxable at 20% = €2,000 then the credit of €1,150 comes off leaving €850. But if your income is say €5,000 taxable at 20% = €1,000 then the credit is €1,000 which brings the tax to €0.

You can only claim either the PAYE credit or the EI credit so if someone is both PAYE and self-employed and already has the PAYE credit then they can't get an EI credit also on top.

The whole idea of the EI credit seems to have been to try and redress the imbalance whereby a PAYE employee got a €1,650 credit but the self-employed didn't even though they both earned that income and the intention has been to bring it up to €1,650 over a number of years.

Paddy001

It also existed in 2016 so you could amend your 2016 return and claim it if you didn’t do so last year.