Tax deductions available to caregivers who support parents
DEAR SAVVY SENIOR: Are caregiving expenses tax-deductible? I provide a lot of financial support to my elderly mother and would like to find out whether I can write any of it off on my taxes.
— Supporting Son
DEAR SUPPORTING: There are actually several tax deductions and credits available to adult children who help look after their aging parents or other relatives.
Here are your options along with the IRS requirements to help you determine whether you’re eligible to receive them:
DEPENDENCY DEDUCTION
If you’re paying for more than 50 percent of your mom’s living costs (housing, food, utilities, medical and dental care, transportation and other necessities), and her 2016 gross income (not counting her Social Security benefits) was under $4,050, you can claim your mom as a dependent on your tax return and reduce your taxable income by $4,050.
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Also note that your mom doesn’t have to live with you to qualify as a dependent, as long as her income was under $4,050 and you provided more than half her financial support.
If your mother does live with you, you can include a percentage of your mortgage, utilities and other expenses in calculating how much you contribute to her support. IRS Publication 501 (see irs.gov/pub/irs-pdf/p501.pdf) has a worksheet that can help you with this. To receive this, or other IRS publications or forms via mail, call 800-829-3676.
SHARED SUPPORT
If you share the financial responsibility for your mom with other siblings, you may be eligible for the IRS multiple-support declaration. Here’s how this works: If one sibling is providing more than half the parent’s financial support, only that sibling can claim the parent. But if each sibling provides less than 50 percent support but their combined assistance exceeds half the parent’s support, any sibling who provides more than 10 percent can claim the parent as a dependent.
But only one sibling can claim the tax break in any given year. Siblings can rotate the tax break, with one claiming the parent one year and another the next. The sibling who claims the parent as a dependent will need to fill out IRS Form 2120 (irs.gov/pub/irs-pdf/f2120.pdf) and file it with his or her tax return.
MEDICAL DEDUCTIONS
If you can’t claim your mom as a dependent, you could still get a tax break for helping pay her medical costs. The IRS lets taxpayers deduct money spent on a parent’s health care and qualified long-term care services, even if the parent doesn’t qualify as a dependent.
To claim this deduction, you still must provide more than half your mom’s support, but your mom doesn’t have to be under the $4,050 income test. And the deduction is limited to medical, dental and long-term care expenses that exceed 10 percent of your adjusted gross income. You can include your own medical expenses in calculating the total.
See the IRS publication 502 (irs.gov/pub/irs-pdf/p502.pdf) for details.
DEPENDENT CARE CREDIT
If you’re paying for in-home care or adult day care for your mom so you are free to work, you may also be able to claim the Dependent Care Tax Credit, regardless of whether your mom qualifies as a dependent on your tax return. This credit can cut up to $1,050 off your tax bill for the year.
In order to claim it, you must fill out IRS Form 2441 (irs.gov/pub/irs-pdf/f2441.pdf) when you file your federal return.
Jim Miller is a contributor to NBC-TV’s “Today” program and author of “The Savvy Senior.” Send your questions to Savvy Senior, P.O. Box 5443, Norman, OK 73070; or visit savvysenior.org.