CAREGIVING TAX BENEFITS WHEN CARING FOR THE ELDERLY
Wondering if there are any caregiving tax deductions you can take to help lower your taxes and maximize your refund? If you haven’t filed your taxes yet, the extended deadline is coming up on July 15, 2020.
As you work on your tax return, you might wonder if there are any deductions you can take based on caring for your older Mom or Dad, or Grandparent, and whether or not you should claim them as a dependent to help lessen the financial burden for their care. This article can help you figure out some tax benefits, but of course does not take the place of your accountant or financial advisor.
- Save all caregiving-related receipts: It is important to document all your expenses. This includes medical bills that are not covered by insurance, transportation expenses for doctor’s appointments, and even home modifications that are medically necessary.
- Use health care spending accounts: Flexible spending and health care spending accounts may be used to pay for medical expenses that are not covered by insurance – but only if the taxpayer is responsible for at least 50% of that person’s care. This makes good recordkeeping a necessity.
- Understand the IRS rules about dependents: To be claimed as a dependent, family members don’t need to live in your home for the entire year as long as you are supporting more than 50% of their living expenses, medical care, and other care.
- Cost-sharing with siblings: When brothers and sister might share responsibility for caring for a family member, only one is allowed to claim the parent on their taxes. In most cases, the sibling who contributes 50% or more to the parent’s expenses is the eligible person.
- Deduct medical expenses you paid: If you’re eligible to claim your older adult as a dependent under the IRS guidelines, you can also deduct the medical expenses you paid for them. Check the IRS list of eligible medical expenses so you don’t miss anything: https://www.irs.gov/publications/p502#en_US_2016_publink1000178866
- Change your filing status if eligible: If you are unmarried at the end of the year and can claim your older adult as a dependent, you can file your taxes as the head of household. If your parent is your dependent and they didn’t live with you, you can still file as head of household if you paid more than half the cost of keeping up their home.
- Elderly Dependent Care Credit or the Aging Parent Tax Credit: If you hire someone to provide care for your dependent older adult so you can work part- or full-time, you may be eligible for a tax credit to offset those care costs. Even if part of that cost is paid by your older adult, you may still be able to claim this credit if you pay 50% or more of their overall care and living expenses.
CONTACT US: Home care services, including caregivers and companions to provide help in the home, is more affordable than you may think. Caring, compassionate, and well trained aides can work within a schedule that is convenient for you, and complement your loved ones personality. We match the skill level and experience of our aides to the proper level of a client’s needs. Consider an Angel to assist at home during the new normal of the pandemic as you return to work, or to provide peace of mind during hurricane season. We are here for you 24/7/365.
Till Next Time!
Irv Seldin, JD, President and Owner, Visiting Angels of the Palm Beaches
*THIS ARTICLE IS NOT INTENDED AS MEDICAL OR FINANCIAL ADVICE.