Caregivers for aging loved ones are often confused about whether or not they can claim a parent or other relative they care for as a dependent, and what expenses they can deduct. While we want to make it clear we aren’t tax advisors, we do want to help you find the resources you need to make that determination.
Claiming a Parent or Aging Loved One as a Dependent
Let’s begin by looking at how to tell if you can claim a parent or other relative as a dependent. According to the IRS guidelines, there are four tests you must meet:
- You are not a qualifying child (dependent) of another taxpayer.
- Your parent or relative meets the qualified relationship test outlined in IRS Publication 501. They don’t have to live with you for you to claim them, but the relationship does have to meet the qualifying criteria.
- You paid more than half of your parent’s support for the calendar year. This is known as the support test.
- Your parent’s gross income for the 2013 calendar year was less than the exemption amount of $3,900.
What Expenses for an Aging Loved One’s Care You Can Deduct
This is another source of tax deductions not all caregivers are aware they might be entitled to make. While this isn’t an exhaustive list, it will give you an idea of what support and out-of-pocket expenses are considered deductible if you claim an aging loved one as a dependent.
- Artificial limb
- Bandages and related supplies
- Care fees for assisted living or nursing home
- Dental care including dentures
- Diagnostic tests
- Eye surgery
- Glasses or contacts
- Guide dog or other service animal
- Hearing aid
- Home care services
- Home improvements or modifications to accommodate a loved one’s illness or disability
- Medical equipment needed to manage an illness or injury
- Medicare Part B premiums
- Occupational therapy
- Physical examination
- Physical therapy
- Prescription drugs and medicine
- Psychiatric care
- Speech therapy
- Stop smoking program
- Transportation to and from medical care including mileage, parking, and any tolls
- Vision correction surgery
For a complete list of deductible medical expenses use IRS Publication 502: Medical and Dental Expenses.
The bottom line is to be sure your tax preparer knows you are a caregiver so they can help you maximize your deduction opportunities.