February 12, 2019
Many caregivers not only provide their time but also financial support to an aging loved one. From household needs to medical costs, the expenses of caregiving add up. On average, the AARP reports caregivers spend 20 percent of their income each year on caregiving. If you incur expenses related to the care of an aging parent or loved one, you may consider how they affect your taxes. In some cases, you may be able to lower your overall tax bill. First of all, make sure you understand how to claim your loved one as a dependent. Then, review total costs related to medical care to see if you qualify for a deduction.
You may be familiar with claiming children as dependents on your taxes. But, you may also be able to claim your parent. To qualify, you must provide more than half of your aging parent’s financial support. The IRS also lists the following additional criteria:
To help decide if you can claim a dependent, you can also use the interactive guide from the IRS.
While some medical costs are covered by Medicare or insurance, be sure to track unreimbursed expenses. If your unreimbursed medical costs exceed 10 percent of adjusted gross income, you might qualify to deduct them. To use this, you should choose to itemize your deductions on your return.
According to the IRS, deductible expenses include medical costs such as doctor, dentist, or surgeon fees. In addition, there are many other expenses that qualify. For example, you can include transportation to appointments or hearing aids and eyeglasses. Your total can include medical expenses for any family member on your return, not just your parent.
These tax deductions require you to keep track of all expenses. Be sure you have a central place to keep your receipts related to caregiving. This will make it much easier to know what you qualify for at tax time. If you have questions, it’s always a good idea to talk to a tax professional for help as well.
As your finances change, be sure you’re still offering the care and support your loved one needs. If you think a change in living arrangements makes sense financially – and otherwise – we’re here to help. We welcome your questions about the costs and amenities of assisted living.
Call (214) 528-0660 today to learn more or schedule a virtual tour of our senior living community.