tax tips — March 01, 2019

3 Tax Strategies That Help You Care for an Elderly Parent

by Susannah McQuitty

Tax strategies that can help when caring for an aging parent text

Switching roles with your parents as the primary provider can be a difficult transition; even if you aren’t caring for your parents full time, there is a distinct shift in freedom and responsibility for all parties involved.

Certain tax breaks for the care providers can help ease that transition, though. As you and your parents adapt to the new normal, check out these three ways that the IRS boosts refunds for taxpayers who provide more than half of their parent's support for the year.

You can claim your parent as a dependent

As mentioned earlier, a dependent is someone who relies on you for at least half of their basic needs for the year. Parents don’t have to live with you to qualify, though—as long as you pay more than half their household expenses, your parents can live at another house, nursing home, or senior living facility. Also, whether they live with you or not, their gross income must be less than $4,150 for 2018 in order to be eligible.

You may be aware that the personal exemption has been removed in favor of a higher standard deduction, which means that you won’t get an automatic tax break just for claiming your parents as dependents.

However, dependents do qualify you for other tax breaks and maybe even a special filing status for unmarried taxpayers. The head of household filing status has a substantially higher standard deduction than the single status and requires at least one dependent.

You can get tax breaks for adult dependents.

You can get tax breaks for adult dependents

While the personal deduction doesn’t apply anymore, there is a $500 nonrefundable credit for qualifying adult dependents, and that credit is applied automatically when you enter the adult dependent’s information on (which definitely makes life a little easier).

If you pay for adult daycare, you could get also get a deduction to help out with those expenses. It’s called the child and dependent care credit, and it’s worth up to 35% of the first $3,000 of care expenses (for a maximum credit of $1,050 for one dependent). That amount is reduced at higher income levels, so see the Tax Guide page on the child and dependent care credit for income caps.

Your siblings can help with the support

Multiple siblings pitching in to care for a parent can help ease the financial toll of living expenses, and you can still decide between siblings who gets to claim the dependent for that year.

Anyone who contributes more than 10% of the yearly total expense amount should sign the Form 2120 for Multiple Support Declaration and give it to the person who will claim the parent.

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