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Tax Help in Caring for an Aging Parent
By
Jim Miller
There is some tax relief available to adult children who help look
after their aging parents or other relatives. But in order to be eligible,
both you and your mom will need to meet Uncle Sam’s criteria. Here’s
what you should know.
IRS Eligibility
If you’re helping financially support your elderly mother, to get a tax
deduction you’ll need to claim her as a dependent on your tax return. For
the 2011 tax year, claiming an additional personal exemption would reduce your
taxable income by $3,700. But to get this tax break, you’ll need to pass
the IRS’s income and support tests:
Income test: To qualify as a dependent, your mom’s 2011 gross income must
have been less than $3,700. Her income from Social Security does not count towards
that total, nor do disability payments. But if your mom receives more than $3,700
from other sources, such as pension benefits, interest and dividends from investments,
or withdrawals from retirement savings plans, you can’t claim her as a
dependent.
Support test: In addition to the income test, you must provide more than half
of your mom’s costs for housing, food, medical care, transportation and
other necessities. Even if all of your mom’s income is from Social Security,
you can’t claim her as a dependent unless you pay more than half her living
expenses.
It’s also important to note that your mom doesn’t have to live with
you to qualify as a dependent, as long as she meets the income test and you provide
more than half her financial support. If your mother lives with you, you can
include a percentage of your mortgage, utilities and other expenses in calculating
how much you contribute to her support. IRS
Publication 501has a worksheet that can help you with this. To receive this, or other IRS publications
or forms via mail, call 800-829-3676.
Shared Support
If you share the financial responsibility for your mom with other siblings, you
may be eligible for the IRS multiple-support declaration. Here’s how this
works. If one sibling is providing more than half the parent’s financial
support, only that sibling can claim the parent. But if each sibling provides
less than 50 percent support, but their combined assistance exceeds half the
parent’s support. In that case, any sibling who provides more than 10 percent
can claim the parent as a dependent. But only one sibling can claim the tax break
in any given year. Siblings can rotate the tax break, with one claiming the parent
one year, and another the next. The sibling who claims the parent as a dependent
will need to fill out IRS
Form 2120 and
file it with his or her tax return.
Medical Deductions
If you can’t claim your mom as a dependent, you may still get a tax break
for helping pay her medical costs. The IRS lets taxpayers deduct money spent
on a parent’s health care and qualified long-term care services, even if
the parent doesn’t qualify as a dependent.
To claim this deduction, you still must provide more than half your mom’s
support, but your mom doesn’t have to meet the income test. And the deduction
is limited to medical, dental and long-term care expenses that exceed 7.5 percent
of your adjusted gross income. You can include your own medical expenses in calculating
the total. Click here for
details.
Check Your State
In addition to the federal tax breaks, more than 20 states offer tax credits
and deductions for caregivers on state income taxes too. Check with your state
tax agency to see what’s available.
This page and its contents ©2012
Metropolitan News Company, Inc.
