As a caregiver, you dedicate your time and energy to take care of an elderly parent or relative. This impacts not only your time but often, your finances as well. If you are responsible for taking care of your elderly parents, this can impact your taxes.
1. You May Be Able to Claim Your Parents as Dependents
You may be able to claim your parents or the individual who you are taking care of, as your dependent if a number of certain circumstances are met.
To start with, you cannot be claimed as a dependent on anyone else's tax forms. Next, you need to have paid for more than half of your parent's financial needs. That includes their rent, food, and medical bills. Basically, if you add up all of your parent's expenses for the past year, and you provided money for more than half of it, that is one of the most important qualifications.
Next, your parent's tax status matters. If your parents bring in so little money that they don't have to file taxes, they can qualify as your dependents. If your parents still bring in enough money from a variety of sources that they have to file taxes, they can't be your dependent. A tax professional can work with you to make sure that you can claim your parents as dependents.
2. Deduct Specific Expenses
If your parents qualify as your dependents, you are able to claim an additional dependent, which can help lower your tax burden. That is not the only benefit though. There are also specific expenses that you are going to be able to deduct from your taxes.
The biggest expense that most children help their elderly parents with are medical expenses. If you are willing to itemize your taxes instead of taking the standard deduction, and medical expenses ate up more than a specific percentage of your income. Medical expenses that you could potentially deduct include premiums for long-term health care, health programs used to treat specific diseases, out of pocket doctor's fees, housing and food required for medical needs, and home modifications.
The list of qualifying expenses is pretty extensive. So keep track of all medical expenses throughout the year and keep receipts of everything so that you and your tax professional can determine if you paid enough medical expenses to do an itemized return.
If you are a caregiver, check with your tax professional and figure out if you can claim your elderly parents as dependents on your tax returns. If you can, it could help you lower your tax burden. For more information, contact your local bookkeeping service.
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