Tax Tips for Elder Caregivers

Tax Tips for Elder Caregivers

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Tax season is a confusing time of year for many people, and for caregivers, it can be especially tricky.  If you are the caregiver for your senior parent, the good news is that you may be eligible for various credits and deductions when you file your taxes.  When it comes to taxes, you should be sure to consult a tax accountant that is familiar with eldercare law.

Below we have some tax tips for caregivers that could help you breathe easier during tax season. SeniorCaring also has information available regarding tax tips for the elderly.

Claiming a Parent as a Dependent

 If you are caring for your senior parent, you may be able to claim them as dependent. Doing so would make you eligible for a tax exemption. To determine if you can claim your parent as a dependent, there are some criteria:

  • Your parent must be related to you.
  • Your parent must be a resident of the U.S., Canada, or Mexico
  • Your parent cannot file a joint tax return with their spouse; must file separately.
  • Your parent must not have a gross income equal or greater to $4,000 (in 2015) a year.
  • You must provide more than half the support for your parent during the year.

Gross income does not include Social Security income or other forms of tax-exempt income.

Support of your parent during the year includes the cost of providing any of the following:

  • Food
  • Lodging
  • Clothing
  • Education
  • Medical and Dental Care
  • Recreation
  • Transportation

If you are unable to claim your parent as a dependent because they filed jointly, or make more than the gross income limit, buy you still have been paying for their medical expenses, you may be able to deduct those expenses.

Multiple Support Declaration

Many times there is more than one caregiver taking care of the parent. Brothers and sisters will often all contribute to provide for the parent. If you and other are all providing support for your parent, you may still be able to get a dependency deduction as long as some requirements are met. 

In order for a group of (up to 5) people to be able to claim a parent as dependent, the following requirement must be met of all caregivers:

  • More than one person was responsible for over half of the parent’s living expenses
  • Each person paid at least 10% of the support
  • No one alone paid over half of the support
  • All other requirements for dependency are met (as mentioned above)
  • Each person who paid over 10% of support agrees not to claim the parent as a dependent (Must have signed statements)

If these requirements are met, you are able to fill out IRS Form 2120 for Multiple Support Declaration

For more information regarding multiple support agreements, see IRS Publication 501, page 21.

Dependent Care Credit for the Elderly

If you paid someone to help you take care of your elderly parent, there is a credit for child and dependent expenses that you may be able to claim if certain conditions are met:

  • Your parent must pass the requirements for dependency
  • You (and your spouse if filing jointly) must have earned income this year
  • You paid the expenses so that you (and your spouse) can work, or look for work
  • Your payments for dependent expenses cannot be made to someone that you or your spouse could claim as a dependent
  • You must identify the care provider on your tax return

Dependent care expenses include the cost of services needed to care for the qualifying person, including running the home. More information regarding the credit for child and dependent care expenses can be found in IRS publication 503.

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