Tax season is in full swing with the filing deadline quickly approaching on April 15. Many family caregivers who provide time and money to elderly relatives may qualify for some tax advantages that will reduce the amount of taxes owed.
Medical and Dental Expenses
With the passage of the Tax Cuts and Jobs Act of 2017, the standard deduction was raised to help simplify tax filings so that most taxpayers no longer have to itemize deductions. If you are caring for a qualifying relative and paid for their medical and dental expenses, those still may be deducted. The threshold for deductible medical and dental expenses has fluctuated up and down over of the last several years. It is increasing again this year to 10% of adjusted gross income. If you paid bills more than 10% of your adjusted income for any and all qualifying relatives, you may be eligible to deduct these expenses.
Claiming a Relative as a Dependent
To get the most tax advantages from being a caregiver, you need to determine whether you can claim the elderly loved ones as dependent. To qualify all of the following requirements must be met:
- The person you attempt to claim as dependent is a U.S. citizen, U.S. resident alien, U.S. national or a resident of Canada or Mexico.
- No one else can claim you (or your spouse if filing jointly) as a dependent.
- The person you attempt to claim as dependent meets the criteria imposed by the tax regulations as a “qualifying relative”. To be a qualifying relative, the person cannot be claimed as a dependent by anyone else. The person must be related to you by blood or marriage OR live with you all year as a permanent member of your household. Note the “or” in that requirement. Someone related by blood or marriage does not need to live with you.
- Additionally, the qualifying relative that you want to claim as a dependent cannot earn more than $4,300 in gross income for the 2020 tax year. Social security income and stimulus checks are not included as income for the purposes of this calculation.
- Finally, you must have provided more than half of the person’s financial support for the 2020 tax year. To calculate the amount of support provided, add up the total amount of support the person received and compare the amount you contributed. If other family members contributed, be sure to collaborate on how to approach everyone’s tax return filings.
Being a caregiver to a senior loved requires a lot of time, money and effort. Make sure you get all the benefits and tax breaks possible. For more information on issues related to caregiving, elder law or long-term care planning contact the experienced attorneys at Stouffer Legal in the Greater Baltimore area. You can schedule an appointment by calling us at (443) 470-3599 or emailing us at office@stoufflerlegal.com.
