If you’re a caregiver for an adult parent or grandparent, this likely costs you money every year. But did you know you could recoup some of it in your taxes? If a senior adult is your dependent on your taxes, you may be able to write off some of the caregiving expenses. But the way the IRS defines an adult dependent is very specific, so you’ll need to make sure you qualify.
Can You Claim an Adult Dependent?
If you want to claim an adult you look after on your taxes, there are some very specific requirements you’ll need to meet. First, they need to be related to you by blood or marriage. So your parent, grandparent, in-law, or sibling could qualify, even if they don’t live with you. Your dependent can’t, however, be your spouse. Someone not related by blood or marriage can count as a qualifying relative if they have lived with you all year, apart from temporary stays like hospital visits.
Second, their gross taxable income must be less than $4,400 for the year. This does not include Social Security for most seniors, unless they also have other income.
Third, you must provide at least half of their support. So if they live in a nursing home, paying two-thirds of the cost out of their Social Security payment, and you pay one-third, they cannot be your dependent. However, you don’t only need to count monetary support. If they live with you, you can count what you could be charging a tenant to rent that room, what you spend on groceries, and so on.
Fourth, they must be a US citizen, national, or resident alien, or a resident of Canada or Mexico.
Last, they may not be a dependent of anyone else. Likewise, you cannot be eligible to be someone else’s dependent.
What You Can Claim for a Senior Dependent
One of the most expensive things about aging is medical care. If you pay for any of your dependent’s medical care, you might be able to write it off. You can write off medical expenses if they exceed 7.5% of your income. This can include doctor visits, prescription drugs, and necessary medical equipment for your parent. The medical deduction is only useful if you’re planning to itemize your deductions. A rough calculation can help you see whether there will be any point to itemizing, or if you’d be better off taking the standard deduction.
Another important deduction is the Child and Dependent Care Credit. You can claim this if you work and your family member is unable to care for themselves while you are away. You will need to be able to provide the caregiver’s name, address, and EIN or SSN. If your provider is unwilling or unable to share this information, you will not be able to claim the tax credit.
For 2022, the maximum amount you can claim is $3,000 for one person, or $6,000 for two people. Depending on your income and expenses, you might not receive all of that back as a tax credit. However, this credit is applied before deductions, meaning you can still claim it even if you will take the standard deduction.
Financial Planning for Caregivers
If you have your parents living with you, or if you plan to become a caregiver in the future, it might take some challenging financial planning. Care can be expensive, and you likely have other financial commitments as well. You need to be on a firm financial footing when you have others relying on you. To ensure you’re up for the challenge, contact us. We can connect you with a financial advisor experienced in caregiving situations.