Many family caregivers approach their tax planning and wonder if they are able to claim a care recipient as a dependent to lower their income tax bill. There are certain basic criteria that the taxpayer must meet in order to claim this deduction:
Qualifying Relative
In order to meet the criteria of a qualifying relative, the person cannot be a qualifying relative of any other taxpayer. They must either be related to you by blood or marriage or must live with you all year as a member of your household. Direct relatives do not have to live with you to count as a qualifying relative for tax purposes. If you are attempting to claim a non-relative as a dependent, that person must have lived with you for the entire year (or in a hospital or nursing home).
Income Limits
The gross annual income of the person you are seeking to claim as a dependent must be less than the IRS determined amount for each tax year ($4,200 for 2019). The IRS defines gross income as “all income in the form of money, property and services that is not exempt from taxation”.
Support Requirements
You must provide more than half of the total support for this individual in the tax year. This support includes food, housing, medical expenses, personal care items and transportation. To calculate your amount of support, compare your total contributions for the calendar year to the total amount of support the individual received from all sources for the year.
If you are able to meet the criteria and claim the individual as a dependent you may qualify for certain tax credits. If you itemize your tax deductions instead of taking the standard deduction, you may also be able to deduct this individual’s medical expenses and dental expenses. This tax strategy may help you minimize the taxes you owe and help you recoup some of the money you have spent to support this individual.
For more information on providing care for elders, contact the Elder Law attorneys at Stouffer Legal in the Greater Baltimore area.
