Is This Tax Deductible? Caring for a Loved One

Being a family caregiver can be lonely sometimes, but know that you are not alone. There are 52 million people in the U.S. who provide caregiving to an adult family member or friend.

Caregiving can be time-consuming and it is also expensive due to medical expenses and therapy not covered by Medicare, co-pays and deductibles, and transportation to get to doctor’s appointments.

If your loved one is one of the million seniors residing in 31,000 assisted living facilities across the country, the costs are even greater.

Expenses you incur to care for your loved one may be tax deductible if he or she meets certain support, income, relationship, citizenship and other tests, and the medical expenses meet IRS standards to qualify for the medical expense deduction.

Those medical costs include prescription drugs, doctor and hospital costs, medical supplies, dental and eye exams and treatments, transportation to get to medical appointments, health insurance premiums including Medicare Part B that is deducted from Social Security payments, and long-term care if in a facility primarily to receive nursing care. (If your loved one is in a facility primarily for custodial care, then only the costs related to nursing care is deductible.)

Deductibility floor. If medical expenses incurred to care for your loved ones qualify, the total unreimbursed medical expenses you paid have to be greater than 10% of your adjusted gross income (7.5% if you or your spouse is 65 or older).

 Residency rules. To qualify for caregiver tax deductions and credits, the person you are caring for must be a United States citizen or resident of the U.S., Canada, or Mexico.

Relationship tests. You can claim tax deductions and exemptions if your loved one is a spouse, dependent child or step-child, a parent or stepparent, father-in-law or mother-in-law. If they don’t fall into one of those categories, they must have lived with you all year.

Dependency deduction. You may claim your loved one as a dependent on your tax return if you pay for more than 50% of their support, they don’t have income over $3,950 for the year, and they don’t file a joint tax return with a spouse.

Record-keeping. In order to claim a tax deduction, you must be able to show that you incurred the expense. It is important to keep receipts or other proof of payment, including information that shows who the payment was made for.

Don’t worry about figuring out whether you can claim your loved ones.  TurboTax ask you simple questions related to you and gives you the tax deductions and credits you’re eligible for.