What You Need to Know About Having an Elderly Dependent
As your parent grows older and you begin to pay more than half of their household expenses, you have the option to claim the individual as an elderly dependent. As a result, you’ll be provided with additional tax breaks.
Requirements for Claiming an Elderly Dependent
Before you begin the process to claim your parent as a dependent, you must first meet the criteria set by the IRS. For your parent to qualify, they must:
Meet the income requirement and not have collected or earned more than the gross income limit for that tax year. Conditions have the potential to change from year to year, so it’s always important to check.
As the individual claiming your parent as your dependent, you must have provided more than half of their support costs for food, housing, utilities, medical bills, and general living expenses. This amount must also be more than their income, including their income from dividends and investments.
Once They’re an Elderly Dependent, Here’s What You Can Deduct
If your parent goes to the doctor, hospital, etc., and you provide more than half of the financing to pay the bill, you can claim a deduction for medical expenses when you file your taxes. Medical costs you can deduct include:
- Hospital Stays
- Long-Term Care Services
- Dental Care
Dependent Care Tax Credit
During the period that your parent is a dependent and you need someone to look after them while you work, you may be eligible to claim the Child and Dependent Care tax credit. To qualify, you must earn an income, and if you’re married, your spouse has to as well. Also, your parent must meet the requirement that they are incapable of taking care of their well-being both mentally and physically. Another requirement you will need to show is the proper identification of your parent’s care provider.
Each tax year, it’s essential to check if changes were made to the minimum and maximum amounts of qualifying care expenses.
Credit for Other Dependents
When you do not qualify for the child and dependent care tax credit, you may qualify for the Credit for Other Dependents. With this tax credit, you also have the chance to get a maximum credit of $500 per elderly dependent. If you start to make more than $200,000 per year or are a married couple and file a joint tax return with an income of $400,000 plus, the credit will phase out.
Financial & Estate Planning for a Secure Future
To ensure your financial future is secure, it’s vital to make an estate plan. Tobin & Collins is ready to review and develop an estate plan suitable for your family requirements and answer any questions you may have. Schedule a consultation with us at (201)-487-7744 or by filling out a contact form.