That time of year is coming up once again: tax season.
If you’re one of the more than 40 million Americans who provide free care to their parents, there are some tax exemptions and deductions that could help you out financially. After all, taking care of your parents as they age not only takes a lot of energy but money as well.
Consult a Tax Professional
If at all possible, it’s always best to talk to a tax professional when doing your taxes. This might seem unnecessary if you planned on doing your own taxes to save time and money. Unfortunately, as our country’s tax code gets more confusing every year, talking to a professional can help ensure that you don’t make any costly errors on your return. Here’s a video to help you understand some tips on how to claim a parent as a dependant.
Whether you choose to speak with a professional or research the tax code yourself, there are three categories you’ll want to pay close attention to.
In order to file a personal exemption for your parent, you have to be able to claim them as a dependent. A parent does not have to live with you to be considered your dependent, but they do have to be related to you either biologically or through marriage.
You also have to provide more than half the support for your parent ever year. This includes rent, food, clothing, transportation, and medical costs. Additionally, they can’t have a gross income of more than $4,150 per year. This does not include Social Security payments.
Dependent Care Credit
The dependent care tax credit is another type of credit you might be eligible for. This income is only available to people who earn an income and file taxes every year. It allows you to claim up to $3,000 for any expenses incurred from in-home care.
If you cover any medical expenses for your parent, you might be able to add them to your itemized deductions. This is only allowed when you can’t claim other deductions because of income or filing status.
Bills that you can deduct include dental care, hospital stays, prescription drug costs, long-term care services and any premiums you have to cover to supplemental Medicare coverage. These deductions are available even if you aren’t able to claim your parent as a dependent.
You can also deduct for little things such as bandages, medical devices such as glasses, and hearing aids. If you need to make modifications to your home or vehicle so your parent can safely move around the home or travel, then you might be able to deduct those as well.
Be careful, though; if you use health savings or flexible spending accounts, it might be illegal for you to claim those as deductions on your tax return.
Remember, it’s always best to speak to a tax professional. If cost is a concern, contact your local library or community college. They often have free services available for members of the community around tax season.
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