Tax Tips for How Family Caregivers Can Maximize Deductions

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As we approach the tax deadline, you may be wondering if there are additional ways that you can try to maximize your deductions as a caregiver. And we’re here to tell you that there are some factors you should research and consider before you officially file, if you haven’t already done so. According to the AARP, “some 42 percent of family caregivers spend more than $5,000 on unreimbursed care for loved ones”; but the silver lining resides in potential deductions and credits. So what can you do?

Claim Your Loved One as Your Dependent

While it’s not categorized as a deduction, you may be able to claim a $500 nonrefundable credit for a dependent who does not qualify for the child tax credit. This would include elderly parents. However, there are certain criteria established by the IRS that you must meet in order to claim this successfully. Some of the qualifications include:

  • Your loved one must be a U.S. citizen, national or resident with a valid ID number.

  • Your loved one’s gross income must not exceed the number designated by the respective year’s specified cutoff amount.

  • If you’re a dependent of another taxpayer, then you cannot claim a dependent in these circumstances.

  • If you pay for more than 50% of your loved one’s annual living expenses, you may claim them as a dependent.

These do not encompass all requirements stipulated by the IRS, but should act as a solid starting point. Additionally, you’ll want to make sure that you’ve maintained detailed records and receipts of all expenses associated with your loved one.

How to Deduct Medical Expenses

It turns out that, according to IRS Publication 502, you may be eligible to deduct money you paid for your loved one’s unreimbursed medical expenses. However, the catch here is that the amount must total more than 7.5% of your adjusted gross income for 2018 along with a couple of other qualifiers.

Some acceptable deductions include, but are not limited to: copays, physical therapy, hearing aids, insulin, adult daycare, transportation to services or appointments, and prescribed medications or equipment.

How to Deduct Long-Term Care Medical Expenses

If your loved one has been deemed chronically ill & required the services of a licensed healthcare practitioner, then you may include qualified long-term care services in your medical expenses. In order for your loved one to be considered chronically ill, he or she must be incapable of performing a minimum of two daily living activities (eating, bathing, toileting, etc.)

For more specific information on how to accurately ascertain this information, reference IRS Publication 554.

While this provides just some insights & advice, there certainly may be additional deduction opportunities available to you. Be sure to do your research so that you’re properly reimbursed!

CareZare is a FREE app for family caregivers to help them manage their care team and ensure the highest level of care for their loved one.