It isn’t just time, but money that most caregivers donate to help support the ones they love. When tax time rolls around, you may be able to claim the person you care for as a dependent on your income taxes. This would allow you to get an exemption for the support you provide for him or her.
To claim your elderly loved one as a dependent, they must meet the following preliminary criteria:
- They cannot be claimed as a dependent by another taxpayer.
- They must be a citizen or resident of the U.S., or a resident of Canada or Mexico.
- They cannot file a joint tax return with a spouse.
If your loved one passes these three initial requirements, read the additional criteria that are explained in detail below.
The person who you want to claim as a dependent must either be a relative by blood or marriage or a member of your household. Relatives do not have to live with you to qualify. Examples include a mother, father, grandparent, stepmother, stepfather, mother-in-law, and father-in-law.
If you wish to claim a non-relative as a dependent, such as a friend, they must have lived with you for the entire year to qualify as a relative in the IRS’ eyes. A non-relative is still considered to be living with you even if they spend time in the hospital or are permanently placed in a nursing home. These scenarios are considered temporary absences.
The Elder’s Income
Your loved one’s gross income for the tax year must be less than $4,050. Social Security benefits are normally excludable, but if they have other income from sources like pensions, interest and dividends, a portion of their benefits may be taxable.
The Amount of Support You Provide
You must have provided over half of your dependent’s financial support for food, housing, medical expenses, transportation, etc. If the person lives with you, include a reasonable percentage of your mortgage, utilities and other household costs in determining the level of support you provide.
Relatives by blood and marriage do not have to live with you in order to be claimed as a dependent. When they live in their own home, in an assisted living facility or a nursing home, the costs you pay for their support at those locations count toward the IRS requirement. Those who are in an assisted living or long-term care facility can qualify as dependents if the income and support levels are met.
Deducting Medical Expenses
One of the benefits of claiming your loved one as a dependent is that any unreimbursed medical expenses you pay for them count toward your itemized deduction. Since medical costs must exceed 7.5 percent of your adjusted gross income before you can claim them, a parent’s added expenses could help you meet this threshold.
Shared Caregiving Responsibilities
Often more than one person is involved in providing care and support for a family member. The person who provides more than 50 percent of the support is entitled to claim the dependent. Be sure everyone is on the same page, so you don’t run into trouble with more than one person claiming the individual.
If none of you solely pays for half of the dependent’s support, but each contributes at least 10 percent, take a look at the IRS Form 2120: Multiple-Support Declaration.
For more information on claiming an elderly relative as a dependent, see IRS Publication 501: Exemptions, Standard Deductions and Filing Information.
If you are unsure about what deductions you are eligible for, it is always best to consult a qualified tax professional for assistance with preparing your tax return.