If you’re a caregiver for an aging loved one, it’s likely you’ve given your time – and financial support. In fact, the AARP reports 78 percent of caregivers have out-of-pocket costs due to caregiving. And, these costs often add up.
Fortunately, some tax deductions may be available to you. To start, understand if you’re eligible to claim your loved one as a dependent. Then, review one of the biggest costs of caregiving medical expenses.
Claiming a Parent as a Dependent
It’s possible to claim your parent or loved one as a dependent if you cover the majority of his or her costs. According to the IRS, you must show that you provide more than 50 percent of your loved one’s financial support. In addition, you should meet the following:
- You (and your spouse if filing jointly) are not a dependent of another taxpayer.
- Your parent, if married, doesn’t file a joint return, unless your parent and his or her spouse file a joint return only to claim a refund of income tax withheld or estimated tax paid.
- Your parent isn’t a qualifying child of another taxpayer.
- Your parent’s gross income for the calendar year was less than the $4,150.
- If your parent is your foster parent, they must have lived with you all year as a member of your household.
- Your parent is a U.S. citizen, U.S. national, U.S. resident alien, or a resident of Canada or Mexico.
To be sure you qualify, it may be helpful to use the interactive guide provided by the IRS. It will take you through each requirement.
After you’ve qualified your loved one as a dependent, then consider medical expenses. Medicare or insurance may cover some of your loved one’s medical care. But, you’ll want to total all unreimbursed medical costs. Plus, you can include any unreimbursed costs for yourself or others claimed on your return.
You can deduct medical expenses if they are over 10 percent of your adjusted gross income. The IRS includes many different medical-related expenses in this deduction. Be sure to think about all costs beyond just doctor or hospital visits. For example, this might include dentist fees, medical equipment, or prescriptions.
Caregiving and Finances
To show you qualify for caregiver-related tax deductions, you’ll need to track all costs. You may find it helpful to create a dedicated file for all caregiving and medical receipts. If you have questions about your finances or taxes, talk with a certified professional. They can give you guidance to make sure you’re on the right track.
It’s common to have concerns about finances and caregiving. If you’re wondering how a change in housing might affect finances, we’re here to help. Contact us to get answers to your questions about the costs of assisted living.
Call (214)328-4161 today to learn more or schedule a tour of our senior living community.