On a similar note...
On a similar note...
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Millions of people in the United States are actively taking care of their elderly parents, according to the Bureau of Labor Statistics. Providing that care can be vital, and it also can be expensive.
However, a few tax breaks might help. These aren't the only ones that might be available to you, so consult with a qualified certified public accountant or financial planner for other options.
1. The Credit for Other Dependents
What it is: You might be able to claim a $500 tax credit if Mom or Dad qualifies as your dependent for tax purposes.
How it works: Mom or Dad has to be your dependent for tax purposes. That might be the case if you provide more than half of their financial support during the year, even if they don’t live with you. (There are many rules about who can be a dependent, so be sure to talk with a qualified tax pro if you think this might be for you.) “Support” can include expenses such as food, utilities, health care, repairs, clothing and travel.
2. The Child and Dependent Care Credit
What it is: If you paid for someone to take care of your parent so you could work or actively look for work, you might qualify for a credit that generally runs 20% to 35% of up to $3,000 of adult day care and similar costs.
How it works: IRS rules say Mom or Dad must have been physically or mentally incapable of self-care and must have lived with you for more than half the year. You’ll need to have earned income to take this credit, and you’ll need to provide detailed information about any care providers.
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3. Your employer’s dependent care benefits
What it is: People often think dependent care flexible spending accounts, if your employer offers them, are just for child care. But elder care may be included too.
How it works: The IRS will exclude up to $5,000 of your pay that you have your employer divert to a dependent care FSA account, which means you avoid paying income taxes on that money. That can be a huge win, but again, Mom or Dad usually needs to be your dependent. What’s covered can vary among employers, so check out your plan’s documents.
4. The medical expenses deduction
What it is: If you paid for Mom’s hospital stay or footed the bill for expensive medical or dental care and weren’t reimbursed by insurance or other programs, you might be able to deduct the cost.
How it works: In general, you can deduct qualified medical expenses that are more than 7.5% of your adjusted gross income. So, for example, if your adjusted gross income is $40,000, anything beyond the first $3,000 of Mom’s medical bills — or 7.5% of your AGI — could be deductible on your return. So if you paid $10,000 in medical bills for her, $7,000 of it could be deductible. Mom needs to be your dependent in this case, too. Your state might have a lower AGI threshold, which means you might get a break on your state income taxes even if you can’t get one on your federal income taxes.