February 12, 2019
Caring for an aging parent requires a lot of love, time – and money. Many adult children provide a big portion of the financial support their parent needs. For instance, the AARP reports caregivers spend an average of $6,954 a year out-of-pocket. In addition to the effects on your overall finances, caregiving may affect your taxes. As you’re preparing your taxes this year, be sure you consider caregiving costs. In some cases, you may be able to claim your loved one as a dependent. You also might qualify for a tax deduction based on medical expenses.
According to the IRS information for caregivers, there are several criteria to claim a dependent. First of all, you must have paid for more than half of your parent’s financial support. This total is during the calendar year of the taxes you’re filing. You must also meet the following:
If you want additional help, you can use the IRS interactive guide to review each of the requirements.
Once you’ve qualified your parent as a dependent, review total medical expenses. The IRS allows you to deduct unreimbursed medical expenses that exceed 10 percent of your adjusted gross income. This total not only includes your aging parent’s costs but also anyone on your return. To claim the deduction, you should itemize on your return.
Be sure to review the full list from the IRS of what qualifies. You can include more beyond doctor, dentist, or surgeon fees. You might also have costs from transportation to medical care or prescription drugs. In addition, unreimbursed costs for medical equipment – like hearing aids, glasses, or wheelchairs – are included.
It’s important to have a system for tracking your caregiving expenses. Make sure you keep and track every receipt – both digital and paper. When it’s time to file your taxes, this will give you a head start on adding up costs. Even more, if you’re unsure about which expenses to track, talk with a tax professional. They can ensure you’re doing things right.
While you’re reviewing last year’s expenses, it’s a good time to look at your overall finances. If you’re thinking about a change to living arrangements, take time to review the financial pros and cons. We’re here to answer your questions and help you understand the benefits of our community.
Call (817) 354-6556 today to learn more or schedule a tour of our senior living community.