If financial support is one way you care for your aging parents, it is possible your aging parents could qualify as deduction on your taxes. If certain criteria are present, are mom or dad a tax deduction?
Between a rough economy and our aging parents living longer, more households are becoming mulit-generational. Oftentimes, this brings with it financial obligations from adult child to their aging parent. If this is your situation, you may have tax options to consider. Is mom or dad a tax deduction?
If you care for your aging parents financially, make sure your tax preparer is aware and ready to look for tax implications. Jeffrey Fields, an attorney, provides information on tax strategies and tax deductions:
“Exemptions: If your aging parent’s income (excluding Social Security) doesn’t exceed the exemption amount you’ll be able to reduce your taxable income by $3,700 (2011 figure). You must provide over half of their support and if they don’t file a joint return, this exemption should be available to you on your tax return.
Deductions: The most obvious deduction would be for medical related expenses, such as, co-pays, prescriptions, eye glasses, medical devices, etc. Of course, you can only deduct the amount of the medical expenses that exceed the 7.5% of your Adjusted Gross Income. But if you’re caring for an aging parent you most likely are spending a great deal on medical care.
Another often overlooked medical expense is home improvements that are medically necessary. This would be ramps, accessible tubs, wider doorways, lowered counter tops, stair lifts, to name a few. If these improvements are made in your parent’s house they may be fully deductible. If they made in your primary residence they may be deductible to the extent that the cost exceeds the increase in value to your home.
Dependent Care: If you pay someone to care for your aging parent so that you are able to work, you may qualify for a tax credit. Another option is to investigate your company’s benefit programs to find out if they offer a Flexible Spending Account or Health Savings Accounts. You contribute to these accounts with before tax dollars and are permitted to pay for qualified medical expenses from the account.”
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Leveraging available tax deductions and credits may help ease the burden of financially caring for your aging parents. With the right tax advice, you will be able to answer the question, “Is mom or dad a tax deduction?” Visit our website for information to help you with the task of caring for your aging parents.