Caregiving might be a little less taxing this year because you may be eligible to declare your parent or other elderly relative as a dependent for a tax deduction, or to deduct their medical expenses from your taxes.
As you prepare your 2011 return, Visiting Angels has a few tips for determining your possible tax benefits. Remember, these tips are guidelines only. It is strongly recommended that you consult with a tax advisor before submitting your return.
In order to declare your elderly relative as your dependent, you both must meet certain criteria:
1. You must be related to the person. If you are caring for your parent, grandparent, step-parent or parent-in-law, you may be eligible for a caregiver tax exemption.
2. The person you are caring for must not have received more than $3,700 in income in 2011. This figure does not include social security payments.
3. You must have provided more than 50 percent of the person’s living expenses, including housing, food, dental care, transportation and other similar expenses in 2011. The person you are declaring as your dependent does not need to live in your home – which means they may be living in their own home, or a care facility, but you must be paying for more than 50 percent of their expenses.
If your situation meets all of the above criteria, you may be eligible to claim your relative as a dependent on your 1040 form, which can equate to a reduction of your taxable income by $3,700 for the year.
If you are not able to declare your relative as a dependent because they earned more than $3,700 last year, but you still provide more than 50 percent of their expenses, you may still be able to receive tax benefits by deducting their medical expenses on your tax return. The IRS allows caregivers to deduct costs incurred from a parent’s health care, such as hospitalization, prescription drugs, dental care, and long-term services. The deduction is limited to medical expenses that are in excess of 7.5 percent of the caregiver’s adjusted gross income.
For more resources for family caregivers, or to explore other care options for your loved one, call Visiting Angels at 661-263-2273 or visit us online at www.visitingangels.com.