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With tax season upon us, many caregivers may be wondering how their elderly relative factors into their income deductions. Caregivers should know that even if a parent is enrolled in an assisted living facility, they may still qualify as a dependent, reports AgingCare.com.
The IRS defines a dependent as someone who has more than 50 percent of their financial support provided by someone else. In terms of elderly relatives, this can include the cost of a senior care community, as well as things like food or assistance with medical bills.
Several other criteria must be met. While non-relatives can be claimed as a dependent if they reside with you, those who live in an elder care facility must be either a mother, father, grandparent, stepmother, stepfather, mother-in-law or father-in-law. Their income must also not exceed $3,700, not including Social Security payments. This is also the amount that you'll be able to deduct from your own income tax.
The senior in question cannot file their own joint tax return with a spouse. Finally, the caregiver claiming the dependent must not be a dependent themselves.
In situations with multiple siblings, it may often be the case that all are contributing an equal chunk of support. If nobody is contributing more than 50 percent of a senior's support, an additional form needs to be filed. Deductions can still be claimed, but it may need to be split among the siblings or one must be chosen to receive the benefit.
Medical expenses for seniors can also count as a separate deduction. For starters, only expenses that exceed 7.5 percent of your annual income are eligible for this benefit. In addition, the expenses must not be covered by insurance or Medicare expenses. However, if the senior is claimed as a dependent, their costs are factored in with your own medical bills. So if the total cost of your family's expenses plus the senior's exceeds the 7.5 percent benchmark, you should be able to get a deduction.
Finally, seniors who are not in a senior care facility but instead live with the caregiver may help with additional deductions, reports The Miami Herald. A portion of your utilities and mortgage can be claimed under "fair living expenses." You may also be able to get benefits if you renovated part of your home as a living space for the senior, although this will only come after the added value to the home is considered.