Caregivers Eligible for Tax Breaks?

Is In Home Care Eligible for Federal Tax Breaks?

by K. Fisher

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If you pay for an elderly family member’s in home care, medical expenses, medications and daily living expenses you may be eligible for some federal tax breaks – you may even be able to claim your parent as a dependent.

It may feel unnatural to officially flip the roles of parent and child from the traditional relationship in which the child is dependent on the parent, to the parent that is dependent on the child. But, if you are responsible for your parent’s care, they are just that – “dependent” on you. So, why not try and take advantage of tax benefits put in place for people just like you?

Gather all of the costs expended over the tax year on your parent/relative and seek professional tax help.

First, what criteria must be met to declare your parent/relative as a dependent?

  1. Reasearch the total income of the parent/relative and the figure it must be below for the year in question.
  2.  This amount is exclusive of disability payments and non-taxable social security. Pensions, bank interest, retirement plans are considered income.
  3. You have paid for 50% or more of your parent/relative’s support. Besides the obvious payments of in home care, medications, etc., it includes costs like:
  4. Food
  5. Room value (how much could you rent their room for?)
  6. Utilities
  7. Clothing
  8. Grooming

*Check current exemption amounts in IRS Publication 501, Exemptions, Standard Deduction, and Filing Information

Now that you have determined your parent or relative is a dependent and declared them as such, you can claim medical deductions, but there are criteria for this as well. Medical expenses you have paid such as prescription drugs, equipment, hospital care and doctor’s visits, must exceed 10 percent of your adjusted gross income. The percentage is decreased to 7.5 percent if the taxpayer is 65 or older.

There are other dependent expenses that can be claimed if not covered by your relative’s health care plan. Here are a few examples:

  • In home care
  • Modifications to your home (wheel chair ramp, bathroom, etc.)
  • Dental
  • Ambulances
  • Adapters to telephones for the hearing impaired
  • Plus more..

 

The bottom line is if you have taken on financial care-giving responsibilities, it is important to seek professional tax help. Research the benefits available and the tax ramifications. It is also imperative to organize all receipts and records to support these expenses in the event of a tax audit.

AARP Foundation Tax-Aide offers free, individualized tax preparation for low-to moderate-income

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