Millions of Americans provide part or full-time care for loved ones—and don’t get paid for this work. In fact, more than 1 in 6 adults in the country who work at a paid job say they also help with the care of an elderly or disabled loved one. On top of other work and family obligations, it can take a lot of time, energy and money to care for an older loved one.
Claiming an elderly parent as a dependent to get a potential tax break may not be high on your list of concerns, but discussing available tax deductions and exemptions with a tax adviser could be well worth your time. Whether you’re planning to meet with a professional or use tax software to do your own taxes, you’ll want to understand the tax implications of a parent living with you.
In This Piece
- Can I Claim My Elderly Mother as a Dependent on My Taxes?
- Can You Claim Someone as a Dependent If They Are on Social Security?
- How to Claim an Elderly Parent as a Dependent
- Potential Tax Benefits for Caregivers
- Benefits of Using a Tax Professional
- Caregiving and Your Taxes
Can I Claim My Elderly Mother as a Dependent on My Taxes?
You can claim someone as a dependent as long as you meet the requirements set by the IRS. There are limits on how much income the elderly parent can make and how much support you provided over the course of the last tax year. If your parent meets these criteria, they can qualify as your dependent for tax purposes.
Can You Claim Someone as a Dependent If They Are on Social Security?
There are no restrictions on claiming someone as a dependent who is currently on Social Security. However, depending on the person’s other income, a portion of the Social Security may have to be counted as taxable income.
How to Claim an Elderly Parent as a Dependent
To claim an older adult as your dependent, you have to meet certain criteria outlined by the IRS. Let’s look at a breakdown of these criteria.
1. Check To See If Their Income Falls Within the Limits for Dependents
Your parent must have made less than $4,300—the limit for the 2021 tax year—in the 2021 calendar year. This income limit is often adjusted from year to year, so make sure to check for the current income guidelines listed on the IRS website.
Social Security is generally not included in this income unless the parent has another type of income, such as dividends or interest. It’s important to talk to a tax professional about your particular situation to ensure your parent’s income is under the limit.
2. Ensure You Have Provided at Least Half of the Parent’s Support for the Year
For your parent to qualify as your dependent, you need to have paid more than half of their total support for the calendar year. The support amount must also be more than the parent’s taxable income. To calculate the support total, include:
- The cost of food and meals you provide
- The market rent for the room your parent is staying in
- The portion of utilities used by your parent
- Any medical bills
- General living expenses
3. Check for Exigent Circumstances
There are some specific circumstances that must be met, including:
- You must not be able to be claimed as a dependent.
- If filing jointly, your spouse can’t be claimed as a dependent.
- Your parent can’t be a dependent of another taxpayer.
- Your parent must meet nationality requirements.
- Foster parents must have lived in your home for an entire year.
This is a lot to check for. Luckily, the IRS has built a tool to help you know if you can claim someone as a dependent.
Once you know if you can claim someone, you can claim them the same way you would your dependent children. Using tax software for this can be helpful because it walks you through the process of entering and double-checking whether you can claim various dependents.
Potential Tax Benefits for Caregivers
Here are some tax benefits that may help you maximize your tax return as a caregiver for a parent.
How Much Do You Get for Claiming a Parent on Taxes?
Dependents who don’t qualify for the Child Tax Credit may be eligible for the Credit for Other Dependents. If you make less than $200,000 a year ($400,000 for married filing joint filers), you may be able to get a credit of $500 per dependent parent. The benefit phases out as your income increases.
Is There a Tax Credit for Caring for an Elderly Parent?
If you paid another person to care for your parents while you worked or looked for work, you may be eligible to claim the child and dependent care tax credit. You—and if you’re married, your spouse—must earn income during the year to qualify for the credit.
Through the Dependent Care Credit, you can claim up to $8,000 for in-home care expenses for 2021. The limit is $16,000 if you paid dependent care expenses for two qualifying individuals.
What About Medical Expenses?
If you provided more than half of your parent’s financial support during a year, you may be able to claim a deduction for medical expenses you paid related to their care. This is only true if you take the itemized deduction. Allowable medical expenses include prescription drugs, dental care, hospital stays, long-term care services and premiums you pay for your parent’s supplemental Medicare coverage.
It’s possible to deduct medical expenses that are more than 7.5% of your adjusted gross income. This is true as long as you didn’t receive any other reimbursement for those expenses.
Benefits of Using a Tax Professional
Talking with a tax professional about possible tax deductions can seem like an unnecessary step when you’re used to filing your own taxes. However, taxes are complicated and ever-changing. The CARES Act and other relief measures due to the COVID-19 pandemic have created some additional options that may affect your taxes.
At Credit.com, we’re not tax professionals, but we do partner with companies that are. Discussing your specific situation with an adviser can ensure you know exactly what you qualify for. Plus, chatting with a tax pro, like those at TaxAct®*, may take a fraction of the time it would take you to sort through the tax laws yourself.
Working with a professional can also help ensure you don’t accidentally cause yourself problems with the IRS in the process of claiming tax credits for caregiving you provide. Tax errors can be very expensive, after all!
Caregiving and Your Taxes
Caregiving should be a rewarding experience, so don’t make a mistake that results in a tax bill that negatively impacts your credit or puts you into the red-flag zone with the IRS. Keep good records of the expenses associated with caring for your parent. And when the time comes to do your tax return, consider turning to tools that help you keep all the details straight and maximize your refund.
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*The TaxAct® name and logo are registered trademarks of TaxAct, Inc. and are used here with TaxAct’s permission.
