Baby boomers are known as the sandwich generation because they are one of the first generations caring for children and parents at the same time. This can come at a huge financial and emotional toll, as people struggle to provide for three generations single-handedly. However, a tax credit for taking care of elderly parent or other relatives can partially defray some of this huge cost.
Can You Declare Elderly Relatives As Dependents?
One of the biggest tax breaks for people caring for elderly relatives is the ability to declare them a dependent. However, only some caregivers will qualify for this. In general, the person must be a relative of yours, even a step-relative or in-law, and have less than $4,050 in income for the past year. You also must provide half of their support. They do not have to live with you in order for you to claim them.
Alternatives to Claiming Dependent Status
If your relative does not qualify as a dependent, there are still other options for getting tax relief. If more than one person is supporting them, you can claim multiple support, in which each person who contributes at least ten percent of their support takes turns claiming them. You also can deduct medical, dental, and nursing expenses for an elderly relative even if you do not claim them, as long as these come to more than ten percent of your AGI. Check out IRS Publication 502 for the long list of goods and services that qualify.
Writing Off Dependent Care
Many elderly people need supervision or additional care in the home. If you are paying for these costs, you may be able to write them off as dependent care. You can get a credit covering 35% of expenses up to a total of $3000. While this is not a lot of money, it can help to defray the additional costs of caring for an elderly loved one.
Caring for elderly relatives can be exhausting and expensive. However, several breaks are available to defray these costs. Talk to your accountant today if you are interested in a tax credit for taking care of elderly parent.
