Providing Care for a Family Member May Lead to Tax Benefits

Jan 09, 2015 By Evan Nielsen In Taxation No Comment Tags : , , ,

Caring for an elderly parent may be a labor of love, but it may also be financially stressful. In fact, the costs, or the loss of income, can be significant. If you quit a job, or cut back on the number of hours you work in order to devote more time to caring for a family member, not only are you giving up salary or wages, but you may also be losing social security or pension benefits. The expenses you may incur in caring for your loved one may be tax deductible.

If you are a family caregiver, there are several options for either taking tax deductions or receiving tax credits.

Tax Deductions

  • You may be able to claim your family member as a dependent. You must meet several qualifications in order to make this claim, including
    • The person you are caring for must be a parent, stepparent, father-in-law, or mother-in-law, who either lives with you or on their own, or any other person who lives with you all year round as a member of your household.
    • You pay for more than 50% of the loved one’s support costs.
    • Your qualified family member may not have a yearly income over $3900. This excludes social security, disability, or any other tax-exempt income. Other types of income, such as retirement, pension, rental would count toward the $3900 income ceiling.
  •  You may be able to take a deduction for medical costs. If your family member does not qualify as a dependent, you may still be able to deduct medical expenses, such as those for hospitalization, prescription drugs, or long term care service. A complete list of allowable expenses is available here.

Tax Credits

If you are able to claim your family member as a dependent, you may also be able to claim Child and Dependent Care Credit. This is a credit you may be eligible to take if you had someone else take care of your loved one while you worked or earned other income. Also, your qualified dependent must not be able to either physically or mentally take care of him or herself. The credit can equal 35% of medical expenses up to a total credit of $1,050.

If you care for a loved one and have questions regarding tax deductions or credits you may be qualified to receive, contact the professionals at Nielsen Law Group for a free and confidential consultation today. Call (480) 888-7111 or submit a web request here.