Caregiving-related tax deductions can lower your taxes and maximize your refund. If you’re caring for an older adult, tax-savvy caregiver Shannon Listman shares 7 smart tax tips for caregivers help you find as many deductions as possible.
Tax time is probably making you wonder if there are extra deductions for caregiving costs and whether or not you can claim your older adult as a dependent.
To maximize your caregiving tax deductions, find out about 7 essential tips.
Note: Keep in mind, it’s always recommended to consult a tax professional about your specific situation.
1. Save all caregiving-related receipts
One of the most important things to do is document all your expenses.
This includes medical bills that are not covered by insurance, transportation expenses for doctor’s appointments, and even home modifications that are medically necessary.
2. Use health care spending accounts
Flexible spending and health care spending accounts may be used to pay for medical expenses that are not covered by insurance – but only if the taxpayer is responsible for at least 50% of that person’s care.
This is an important distinction and part of what makes good recordkeeping a necessity.
3. Understand the IRS rules about dependents
To be claimed as a dependent, family members don’t need to live in your home for the entire year as long as they meet other guidelines. That includes your supporting more than 50% of their living expenses, medical care, and other care.
For a non-family member, if a person lives in your home for the entire year, meets the low-income guidelines (excluding Social Security and disability payments), they may be considered a dependent for tax purposes.
4. What to do when cost-sharing with siblings
When multiple siblings are responsible for caring for a family member, only one is allowed to claim the parent on their taxes. In most cases, the sibling who contributes 50% or more to the parent’s expenses is the eligible person.
Try to work this out early in the tax year so there is no question about who will be claiming the parent as a dependent or claiming the caregiving expenses.
5. Deduct medical expenses you paid for
If you’re eligible to claim your older adult as a dependent under the IRS guidelines, you can also deduct the medical expenses you paid for them.
6. Change your filing status
If you are unmarried at the end of the year and can claim your older adult as a dependent, you can file your taxes as the head of household.
If your parent is your dependent and they didn’t live with you, you can still file as head of household if you paid more than half the cost of keeping up their home.
7. Additional tax credits
If you hire someone to provide care for your older adult so you can work part- or full-time, you may be eligible for a tax credit to offset those care costs.
Even if part of that cost is paid by your older adult, you may still be able to claim this credit if you pay 50% or more of their overall care and living expenses.
Recommended for you:
- Get Free Tax Preparation Help for Seniors from the IRS
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- 8 Ways to Lower the Cost of In Home Care for Seniors
Guest contributor: Shannon Listman is a South Jersey native who recently relocated to Charlotte, NC. She believes the internet can both help and hurt the world, but is determined to leave a positive digital footprint with useful information and encouraging thoughts.
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