Dear Savvy Senior,
Are there any tax breaks that you know of for family caregivers? I help financially support my 82-year-old mother and would like to find out if I can write any of these expenses off on my taxes.
Supplemental Sam
Dear Sam,
There are actually several tax credits and deductions available to adult children who help look after their aging parents or other relatives. Here are some options along with the IRS requirements to help you determine if you’re eligible to receive them.
Tax credit for other dependents
If your mom lives with you and you’re paying more than 50 percent of her living expenses (housing, food, utilities, health care, repairs, clothing, travel and other necessities), and her 2021 gross income was under $4,300, you can claim your mom as a dependent and get a nonrefundable tax credit of up to $500.
If you happen to split your mom’s expenses with other siblings, only one of you can claim your mom as a dependent, and that person must pay at least 10 percent of her support costs. This is called a “multiple support agreement.”
The IRS has an interactive tool that will help you determine if your mom qualifies as a dependent. Go to IRS.gov/help/ita, scroll down to “Credits,” and click on “Does My Child/Dependent Qualify for the Child Tax Credit or the Credit for Other Dependents?”
Medical deductions
If you claim your mom as a dependent and you help pay her medical, dental and/or long-term care expenses, and weren’t reimbursed by insurance, you can deduct the expenses that are more than 7.5 percent of your adjusted gross income (AGI).
So, for example, if your adjusted gross income is $80,000, anything beyond the first $6,000 of your mom’s medical bills – or 7.5 percent of your AGI – could be deductible on your return. So, if you paid $8,000 in medical bills for her, $2,000 of it could be deductible. You can also include your own medical expenses in calculating the total.
You should also know that your state might have a lower AGI threshold, which means you might get a break on your state income taxes even if you can’t get one on your federal income taxes.
To see which medical expenses you can and can’t deduct, see IRS Publication 502 at IRS.gov/pub/irs-pdf/p502.pdf.
Dependent Care Credit
If you’re paying for in-home care or adult day care for your mom so you are free to work, you might qualify for the Dependent Care Tax Credit which can be worth as much as $4,000.
To be eligible your mom must have been physically or mentally incapable of self-care and must have lived with you for more than six months. To claim this tax credit, fill out IRS Form 2441 (IRS.gov/pub/irs-pdf/f2441.pdf) when you file your federal return.
Flexible Health Savings Accounts
If you have a health savings account (HSA) or your employer offers a flexible savings account (FSA), you can use them to pay for your mom’s medical expenses if she qualifies as a dependent. But be aware that if you use an HSA or FSA to pay for your mom’s medical costs, you can’t take a tax deduction on those expenses too.
For more information, see IRS Publication 969, “Health Savings Accounts and Other Tax-Favored Health Plans” at IRS.gov/pub/irs-pdf/p969.pdf.