ElderCare Tax Deductions

As more and more adults are choosing to age in place at home or in the home of a loved one, the need for eldercare has never been stronger. Luckily for those families who care for their older relatives, there are some eldercare tax deductions worth looking into.

As everyone knows, tax laws can be tricky. However, if you are providing eldercare for your aging mother, father, or any other relative, you may be able to recoup some of the costs spent on their eldercare.

Claiming Your Elderly Relative as a Dependent

The IRS has strict guidelines that need to be met in order to determine whether a person can be claimed as a dependent or not on your tax return. If you are providing eldercare services for a relative in your home, there is no reason why you shouldn’t see if you can claim them as a dependent on your tax return.

If you answer “Yes” to the following questions, the relative that you are providing eldercare for may qualify as a dependent on your tax return.

1. Have you provided at least half of your senior relative’s financial support?
2. Has the relative you are providing eldercare for lived in your home for the full tax year?
3. Is your relative a citizen or national of the US?
4. Does your relative receiving the eldercare reside with you in the US, Canada, or Mexico?

Elderly Dependent Care Federal Tax Credit

Alternatively known as the Child and Dependent Care Credit, this tax credit is for expenses that a family acquires paying for eldercare services, such as adult day care or other home care services, so that they can work and earn a living outside of the home.

Elderly Dependent Care State Tax Credits

Some states will allow those who provide eldercare services for their dependents the opportunity to deduct a portion of their federal tax credit from their state income tax returns. This credit is in place to help take the burden off of taxpayers that need to work outside of the home, but need to pay eldercare costs for their elderly dependent in order to do so.

Medical Expense Deductions

When claiming your relative that you are providing eldercare for on your taxes, you may be able to claim their medical and dental expenses as well; that is, if the total sum of those expenses exceeds 7.5% of your adjusted gross income (AGI).

Tax laws are complex and are constantly changing. If you plan on claiming a relative that you are providing eldercare for on your tax return, it is highly recommended that you use an accountant that is familiar with eldercare tax laws to ensure that your taxes are done correctly and that you get the deductions that you are entitled to.