The information in this article is up to date through tax year 2019 (taxes filed in 2020).
As a caregiver, you may qualify for a few tax breaks that can save you money, lower your tax bill, and provide some financial relief. Here are some steps you may consider when you go to file your next tax return.
Claiming your family member as a dependent
If you take care of your elderly relative who lives in your home, you may be able to claim them as a dependent. Claiming a dependent is one tax break that can lower the amount of your income that is subject to tax.
To claim your parent or relative as a dependent, the following must be true:
- You provided more than half of your parent’s financial support during the current tax year, and
- Your parent must not have earned more than the gross income limit for the specific tax year (this amount changes every year)
Choosing head of household filing status
If you take care of your elderly parent who lives in your home, you may be able to choose head of household as your filing status. The conditions for filing as HoH are as follows:
- you must not be married
- you were responsible for more than 50 percent of the cost of maintaining the home for your parent (e.g. buying food, clothing, and other necessary items for your parent) during the year.
Note: Your parent, as your dependent, is not required to reside with you for you to be considered head of household.
Deducting medical and dental expenses
If you itemize your deductions on Form 1040, Schedule A, you may be able to deduct the medical and dental expenses you paid for yourself, your spouse, and your dependents.
Remember, medical expenses must be more than 10 percent of your adjusted gross income, or AGI (7.5 percent of your AGI if you or your spouse is age 65 or older).
For example: If you pay for part of your parent’s medical expenses, you may be able to deduct these medical expenses on your tax return if your parent was your dependent (see criteria above), but not if
- he or she earned $4,200 or more in taxable income
- he or she filed jointly
- you are claimed as a dependent on someone else’s tax return
Let’s say you pay someone to care for your parent or relative while you work. In this case, you may be eligible for the child and dependent care credit on your tax return. Credits are especially helpful because they can really reduce your tax bill. See if you qualify for the child and dependent care credit.