Can you claim your caregiving expenses for a parent as a parent tax deduction? Children who financially care for a parent may be entitled to claim the parent as a dependent on their tax return which can translate into deductions for the family caregiver.
The Internal Revenue Service (I.R.S.) has multiple criteria to determine if a parent would qualify as a dependent beginning with the 50% thresh hold. If more than 50% of the care for a parent is paid by a child or multiple siblings determinations can begin on qualifying the parent as a dependent.
Parental Expenses To Consider For A Parent Tax Deduction
- Cost of the room provided
- Cost of a care facility
- Food, utilities
- Prescription costs
- Durable Medical Equipment Costs
- Medicare Advantage premiums, long term care insurance, deductibles, co-insurance payments
Medical Expense Deduction
The I.R.S. specifies that an individuals’ medical expenses must exceed 10 percent or more of the adjusted gross income to deduct medical expenses. Children who financially contribute to the medical expenses of a parent may also qualify to add those contributions to their own medical deductions.
Dependent Care Credit
A Dependable Care Credit is a non-refundable tax credit with strict criteria regarding care expenses for the parent and the child’s income. IRS specifies the requirements of a qualifying individual; a parent who is unable to care for himself physically or mentally would qualify.
The intent of the dependent care credit is to subsidize care for your parent while you are either working or looking for work.
Consult IRS publication 503 for IRS guidelines.
I.R.S. rules can change annually which can affect the criteria and the qualification amounts. Financial figures to begin with calculating if you would qualify for a parent tax deduction: gross income of parent(s) and what percentage of their financial support do your provide?
Multiple Support Declaration
Siblings who collectively finance care for a parent may be able to qualify for tax deductions based on the amount each contributes. A sibling must contribute a minimum of 10 percent toward the care of a parent to qualify.
Example: A parent is in a nursing facility. While the parent’s social security may cover 40% of the cost, the remaining 60% is financed by three siblings.
Because the parent is more than 50% financially dependent upon either an individual or multiple siblings, you can decide if the parent can be claimed by one sibling or split the cost/deduction across multiple contributing siblings.
One advantage of the multiple support declaration is the arrangement is only for one tax year. Should contributions and family financial arrangements change, calculations begin anew with each tax year.
Experts also suggest siblings sign statements for each sibling that waives the tax claim for the year.
IRS Forms And Publications To Review
Claiming a parent as a dependent is unique to each household, finances and care arrangement. Consulting a tax professional may be a wise investment for the Do It Yourself tax preparers to accurately determine if a parent can be claimed as a dependent. These forms can be difficult to fill out when multiple family members are financially responsible for a parent and the IRS has strict regulations regarding claiming a parent. As always ensure your tax professional is aware of the latest changes in the IRS laws.