If you’ve been taking care of one or both of your aging parents there are certain tax laws and breaks that will help ease the financial burden that you’re under. As with anything g that the feds get involved in there are certain rules and criteria that you and your folks will need to meet. Some of those criteria include;
- The amount of mom or dad’s income, including what they get from Social Security
- How much the support cost is that you provide them.
- How much you contribute to their housing costs
- How much of their medical bills that you pay.
- How much help is there when you combine all siblings together.
One of the hardest criteria is the income that your dad or mom have earned and have in savings, stocks, bonds and so forth. If they make too much from all of those combined incomes (excluding Social Security), then you probably won’t be able to claim them as dependents. If, however, you pass this test the next is how much support they receive from you.
In fact, they must get over 50% of their support from you to qualify and, in this case, what they get from social security is going to be a factor. If, however, they don’t actually live with you but in their own home or an assisted living center these costs will count towards your support. This one is actually tricky because of what the IRS considers ‘support’ and what it does not, which seems to change at a whim. If you need help with this you can check IRS Publication 501, Exemptions, Standard Deduction, and Filing Information for all of the info.
If your folks pass these 1st two criteria you can then use any and all medical expenses on the itemized deduction form. Indeed the help of your parents’ medical costs might enable you to reach the 7.5% threshold that you need before you can claim them, an added bonus. There’s a little wiggle room here with the IRS too as, even if they earned too much to be considered a dependent they can still be seen as one for medical expense deductions. If they need continuous care you may also be eligible to get added tax breaks.
If you and your siblings are all contributing to the support it doesn’t mean that you can’t deduct mom and/or dad as a dependent, it just means that only 1 of you can. (Assuming they meet all the other criteria of course.) Since only 1 sibling will be able to do this the details need to be worked out, agreed upon and documented first. Experts recommend that siblings rotate this responsibility / tax break on a yearly basis.
Whatever the results just make sure to treat mom and dad with respect and kindness, like they did to you when you were kids and dependent on them. Remember that someday your kids will have to do the same thing for you.