Millions of people across the U.S. are caring for their elderly parents. Providing that care can be vital as well as expensive: The out-of-pocket expenses can run over $100k on average in families in which an elderly person has long-term care needs.
However, there are a few tax breaks might help. These aren’t the only ones that might be available, but some common ones we have seen.
1) Dependent Exemption
You might be able to claim all or part of an exemption of up to $4,050 if your adjusted gross income was less than $436,300 (for joint filers) or $384,000 (for single filers) in the 2017 tax year.
2) The Child and Dependent Care Credit
If you paid for someone to take care of your parent so you could work or actively look for work, you might qualify for a credit that generally runs 20% to 35% of up to $3,000 of adult day care and similar costs. Tax credits directly reduce the amount of tax you owe, giving you a dollar-for-dollar reduction of your tax liability. A tax credit valued at $1,000, for instance, lowers your tax bill by $1,000.
3) Employer’s Dependent Care Benefits
Another tool is: The IRS will exclude up to $5,000 of your pay that you have your employer divert to a dependent care FSA account, which means you avoid paying taxes on that money.
4) The medical expenses deduction
If you paid for Mom’s hospital stay or footed the bill for expensive medical or dental care and weren’t reimbursed by insurance or other programs, you might be bale to deduct the cost.
In general, you can deduct qualified medical expenses that are more than 7.5% of your adjusted gross income.
Caring for loved ones can be difficult and put a strain on families expenses. Utilize all the tools at your disposal.