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2011 Tax Tips for Family Caregivers

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2011 Tax Tips for Family Caregivers

AgingCare.com

If you are supporting an elderly parent, you may qualify for some tax benefits from the U.S. government that reward you for your caregiving efforts. These tax benefits may include claiming your parent as a dependent on your tax return or deducting the contributions you made towards their medical expenses and care. In order to qualify for these tax breaks, you must first be aware of the tax benefits available and then determine whether you qualify. “It is important for all family caregivers to verify their eligibility and take advantage of these tax credits,” said Allen Hager, chairman and CEO of Right at Home, Inc, an international in-home care franchise.

Answers to Tax Questions Caregivers Ask Most

Tip #1: Determine if you are able to claim your elderly parent as a dependent.

If you support your elderly parent, you will want to claim him/her as a dependent on your tax return to receive the maximum amount of tax savings. You can then take an exemption for the 2011 tax year, which will equate to a reduction of your taxable income by $3,700. In order to determine if you qualify to claim your elderly parent as a dependent, you will need to pass the following four tests.

Not a qualifying child test – Obviously, a qualifying child is another type of a dependent; however, the IRS wants to ensure a qualifying child dependent status (which has its own set of requirements) is not claimed using these four tests. This test is a non-issue for caregivers.

Tax Tips for Caregivers: Claiming a Parent as a Dependent

Member of household or relationship test – If you are a son or daughter who is caring for a parent, you qualify since you meet the relationship test. You and your parent do not need to live with one another in order to qualify. In the case where a parent lives on their own or in assisted living, your parent may still qualify as a dependent as long as they pass the other tests.

Gross income test – Your parent’s gross income for the year must be less than $3,700. This amount does not include income from non-social security or disability payments. However, income received from other sources, such as withdrawals from retirement plans, pension benefits, rental income, or interest and dividends from investments would go towards a parent’s income total, which could disqualify the parent as a dependent if he/she exceeds the income limit.

Support test – The final test to complete is the support test. This test can be the most complicated to determine. In order to meet the requirements of this test, you must pay for over half of your parent’s expenses. There are many factors involved in coming to this conclusion including food, housing, clothing, medical care, and transportation expenses.

More information on claiming your elderly parent as a dependent

Related:
The 10 Most Overlooked Tax Deductions
Can You Use An FSA for Your Parentís Medical Expenses?
2011 Tax Tips for Family Caregivers

2011 Tax Tips for Family Caregivers originally appeared on AgingCare.com. Visit AgingCare.com for more information on Tax Tips for Caregivers.

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AgingCare.com connects family caregivers and provides support, resources, expert advice and senior housing options for people caring for their elderly parents. AgingCare.com is a trusted resource that visitors rely on every day to find inspiration, make informed decisions, and ease the stress of caregiving.

12 comments

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12:57AM PDT on Apr 8, 2013

It's good to post updated tips every year since the tax laws always seem to be changing. Thanks.

12:03PM PST on Mar 6, 2013

thanks

1:16PM PST on Feb 12, 2013

noted

4:56AM PST on Feb 20, 2012

Good article, carers need all the help they can get - MANY THANKS.

1:55AM PST on Feb 18, 2012

Thanks for the article.

12:14PM PST on Feb 17, 2012

Thanks, good info.

10:08AM PST on Feb 17, 2012

This is great info to know. There are a lot of people out there who care for their elderly parents that can't afford hospice care or to be placed in a nursing home for care. Thank you for this information!

7:20AM PST on Feb 17, 2012

Thanks It would work for us untill it came to the family signing any papers declaring they are not taking the deduction.

4:34AM PST on Feb 17, 2012

thanks

10:39PM PST on Feb 16, 2012

Thanks. This will help alot of people.

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Disclaimer: The views expressed above are solely those of the author and may not reflect those of
Care2, Inc., its employees or advertisers.

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