- 1 Council Tax Reduction - non-dependant deductions for pensioners
- 2 How to Claim Student Loan Tax Credits and Deductions
Council Tax Reduction - non-dependant deductions for pensioners
If you're entitled to Council Tax Reduction (CTR), your entitlement may be reduced if you have a non-dependent adult living with you. This is because the non-dependant is expected to contribute to your household expenses.
If you're a pensioner, there are specific rules about how non-dependants affect your entitlement to CTR. If you're not a pensioner you need to check your local authority's CTR scheme to see how your entitlement is affected if you have a non-dependant living with you.
Read this page to check if you have a non-dependant living with you and how this might affect your entitlement to CTR, if you're a pensioner.
A non-dependant is an adult who lives with you. This doesn’t mean your partner or adult children who are still dependent on you – for example, because they are in education. It could be for example, an adult son or daughter who is working or unemployed and who still lives with you.
The following people are not classed as non-dependants, even if they live with you:
- your partner
- dependent children of you or your partner
- foster children
- anyone who is jointly responsible with you for the council tax - for example, a joint owner or tenant
- someone who lives with you to look after you or your partner and who is employed by a charity or voluntary organisation who charges for this service
- a boarder, sub-tenant or licensee.
When you claim CTR, you're considered to be a pensioner if you've reached the age for getting Pension Credit.
If you're under the age for getting Pension Credit, your local authority can decide it's own rules about how non-dependent adults living in your household are treated. You will need to check your local authority's CTR scheme to find out what the rules are.
If you have a non-dependent adult living with you, the amount of CTR you get will be reduced. The amount your CTR is reduced by will depend on the circumstances of the adult living with you - on how many hours they work and how much gross income they earn.
The table below shows the amount which is taken off your CTR, depending on the circumstances of the adult living with you.
Gross income is the amount you earn before tax and other things like national insurance are taken off.
When a local authority works out how much gross income a non-dependant adult earns, they shouldn’t count any of the following:
- Attendance Allowance
- the care component of Disability Living Allowance
- Personal Independence Payment
- Armed Forces Independence Payment
- payments made under certain charitable funds, such as the Eileen Trust or the Caxton Foundation
If you have a non-dependent adult couple living with you, only one deduction is made for both people. The deduction made is the highest that would have been made if they were treated as individuals. To decide which income band applies their joint income counts even if only one of them is working full-time
Your 25 year-old son Jamie and his girlfriend Maria live with you. Both of them are working. Jamie works 20 hours a week and earns £160. Maria works 22 hours a week and earns £200. The amount deducted from your CTR will be £9.65 a week.
Are deductions always made for non-dependent adults?
There are some circumstances when, even if a non-dependent adult lives with you, a deduction won’t be made from your CTR. This could depend on your circumstances, or those of the non-dependent adult.
A deduction won’t be made from your CTR, even if you have a non-dependant adult living with you if either you or your partner is:
- registered blind
- getting Attendance Allowance
- getting Disability Living Allowance care component
- the daily living component of Personal Independence Payment
- Armed Forces Independence Payment.
A deduction won’t be made from your CTR, even if you have a non-dependant adult living with you if the adult:
- is someone who isn't counted when the local authority works out who lives with you – for example someone who is currently in prison, or someone who is severely mentally impaired
- is a full-time student
- is a 16 or 17 year old
- is staying temporarily with you but normally lives somewhere else
- gets Income Support, Pension Credit, income-based Jobseeker's Allowance (JSA), income-related Employments and Support Allowance (ESA) or Universal Credit (UC) where the award is calculated on the basis that the adult has no earnings
- is doing youth training and getting a training allowance
- has been in hospital for more than 52 weeks
- is a member of the regular or reserve Armed Forces who is temporarily away on operations.
When you’re working out how long someone has been in hospital, you can add separate hospital stays together to make a stay of more than 52 weeks. You can only do this if the stays aren’t separated by intervals of more than 28 days.
myIR, payments and more
This calculator will work out income tax and income tax rates from 2009 to 2018
Use this calculator:
- if you're completing an income tax return, and
- you're an individual person, a company, a trust or an unincorporated body, and
- once you know what your total taxable income is, then you can work out the tax on that taxable income.
You will need your total taxable income.
This calculation doesn't take into account any tax credits which may reduce your tax. It only calculates the income tax on the taxable income you enter.
Income that you earn from personal effort is also liable for ACC earners' levy. If you earn salary or wages, the levy is deducted as part of your PAYE deductions each payday.
This calculator will calculate the tax payable on any given annual income amount which does not include any ACC earners' levy that is required to be paid.
This service is located on a secure part of our website to prevent unauthorised interception. If you are unable to access this product, your browser and/or firewall settings may need updating.
How to Claim Student Loan Tax Credits and Deductions
Want to get rewarded for paying back your student loans? Make sure you claim your student loan interest payment deductions on your tax return. Tax time is the one time of year when you could actually see a significant amount of money deducted from taxes owed by repaying your student loans.
If you’re a single filer or you’re paying back student loans on behalf of a dependent, you could see a nice tax refund (up to $2,500) come your way if you paid for education related expenses in the last year or you made student loan interest payments – all thanks to a handful of helpful IRS education credits and student loan interest deductions.
So, who qualifies for these student loan tax credits and deductions?
It’s no fun putting some of your hard-earned money toward paying off interest that’s accrued on your debt, but the good news is you could get a student loan tax deduction for doing so.
The more student debt you owe, the more interest you’re likely paying every time you make a payment – and that means the more you can deduct from your taxes.
If you’re digging through the tax forms you got in the mail this year, keep an eye out for the Form 1098-E. This form from your student loan lender will let you know how much interest you’ve paid; you’ll use this to determine how much you can deduct when you file your taxes (up to $2,500 for single filers).
If you didn’t get a Form 1098-E from your lender, it might mean you paid $600 or less in interest in the past year – but you can still take this deduction, even without the form.
Did you pay down interest that accrued on your student loans, while on an Income Based Repayment or Income Contingent Repayment plan?
Here’s some extra good news for those who have signed up for an Income-Based Repayment or Income-Contingent Repayment plan: not only is your monthly student loan repayment lower, you can still take the interest deduction mentioned above, too.
According to the IRS, you’re allowed to deduct interest that you paid on qualified student loans regardless of your repayment plan. That’s a win-win in the short term.
Just remember: if the federal government ends up forgiving some of your student loan debt due to federal student loan forgiveness programs in the future, you’ll have to pay taxes on any amount that is forgiven.
Do you make less than $80,000 as a single filer ($160,000 for joint filers)?
To be eligible to deduct all or some of your student loan interest during tax time, you’ll need to have a modified adjusted gross income of less than $80,000, or $160,000 if married filing jointly.
With the average post-college salary hovering around $45,000 annually, many recent college graduates will qualify.
Wondering how much you can save with the student loan interest deduction? Find out with our deduction eligibility quiz!
Case 2: You paid for tuition, fees and other education expenses for an undergraduate degree or continuing education
Are you still in school or did you just graduate with a four-year degree this past year? Thanks to the American Opportunity credit, you could qualify for a nice refund.
If you paid for tuition, fees, books or other qualified education expenses and you attended school for at least half time for the tax year that you’re filing for, you could be able to take advantage of this credit for the first four years you attend school.
The American Opportunity Tax Credit will cover 100 percent of the first $2,000 in qualified expenses and then 25 percent of expenses after that up to $2,500. If you’re not pursuing a degree but you spent money on job training or other qualified education, you’re still in luck: you may be able to apply for the Lifetime Learning credit.
This is meant for folks that are continuing their education but not necessarily pursuing a degree. You can claim up to $2,000 per tax return with this credit. Keep in mind you can only claim one of the two credits listed above, not both.
Where and how can you claim these student loan tax credits and deductions?
Phew – that’s a lot of tax breaks to keep in mind! So just how do you file your taxes to take advantage of all that? IRS Form 8863 and Form 1040 for tax break and student loan interest deductions are going to be the two areas to pay attention to when you file your taxes.
Of course, if you have a relatively straight-forward tax situation, you should be able to file your taxes through online software, like TurboTax, and receive the appropriate prompts to claim your deductions and your credits. You may even be able to file your taxes for free.