While taking care of a disabled or aging relative can be seen as a labor of love, caregiving can be stressful as it is rewarding. According to the Family Caregiver Alliance, 29% of adults are caring for someone who is ill, aging, or disabled. If you are caring for a loved one, you know too well the stress of balancing caregiving with employment, the needs of your other family members or spouse, and maintaining a healthy financial outlook. However, you may be able to claim your loved one as a dependent if you provide most of their care.
In order to claim your loved one as a dependent, they must earn less than $3900.00 per year, outside of any Social Security or Social Security Disability Income (SSDI). Income that can be counted in the annual figure can include pension income, interest income, and investment dividends.
You must also be providing at least 50% of the person’s support, along with utilizing at least 10% of their Adjusted Gross Income (AGI) to cover their medical expenses.
If you share caregiving duties with siblings or other family members, only one of you can claim your aging or disabled loved one as a dependent at any one time.
These expenses can also be claimed as itemized deductions:
- Medical/dental expenses
- Long-term care costs
- Prescription expenses
- Milage to and from medical appointments
- Certain home modification expenses, provided they are for the sole purpose of making your home or your loved one’s home more accessible for them.
It’s All (Non) Relative
What if the person you’re caring for isn’t a relative, but a close friend or other non-relative? You can still claim them as a dependent, if you meet one of the residence criteria:
- You must live with that person for the entire tax year, or they must live with you for the tax year.
- This rule doesn’t apply to non-relative caregivers who live out, even if they provide the majority of the financial support for related to the person they are caring for.
If this is your first year as a caregiver, check with a licensed tax pro regarding dependent care expense deductions and guidelines. While caregiving expenses can be claimed on your tax return, there are guidelines that have to be met by both you and the person your are caring for. An appointment with a qualified tax pro can help you sort out these issues well before tax day.
As with any tax matter, keep all receipts and records related to the deductible expenses and bring them with you when meeting with a tax pro for the first time. Caregiving can be stressful, but if you arm yourself ahead of tax day with the right information regarding deductible expenses, you will be one step ahead and have one less stressful caregiving issue to contend with on tax day.