TAX TIP No. 7
Tax help in caring for your aging parent
The one bit of wiggle room here is that
your parent doesn't have to live with you. When a parent
is able to remain in his or her own house, in an assisted
living facility or a nursing home, costs you pay for
parental support at those locations count toward meeting
the IRS requirement.
though, in determining what
is support. Uncle Sam may
not agree with what you and
your parent consider vital.
For example, items such as
furniture, appliances or even
cars can in some instances
be counted as support; other
times the IRS says "no."
Publication 501, Exemptions,
Standard Deduction, and Filing
Information for details
and examples. The booklet
also contains a work sheet
to help you figure your support
and other costs
Once your parent does meet
the IRS dependency tests,
you can use any medical expenses
you pay for mom or dad toward
this itemized deduction. Since
medical costs must exceed
7.5 percent of your adjusted
gross income before you can
claim them, a parent's added
expenses could help you meet
And the IRS offers a little leeway here.
If your parent isn't considered a dependent for exemption
purposes simply because he or she earned too much but
met the other tests, the IRS says mom or dad still could
be counted as a dependent for medical deduction purposes.
up those parental medical
costs, don't forget premiums
for supplementary Medicare
coverage or long-term care
insurance. Once your parent
is your dependent, some of
these payments that you make
can be counted toward your
deductible medical expenses.
But the precise amount of long-term-care
policy payments that you can add to your medical expenses
is limited by your parent's age. They range from a low of $310 for coverage of a parent age 40 or younger to $3,850 for a policy beneficiary age 71 or older. In between, the IRS says you can count $580 spent on a policy for someone between ages 41 and 50; $1,150 for coverage of a person from ages 51 to 60 years; and $3,080 for a dependent aged 61 to 70.
And if your dependent parent lives with
you and requires continual care, Roth says, you may
be eligible for another tax break. What you spend for
this attention generally won't count toward the medical
deduction. But if it's necessary so that you can go
to work, you can claim the dependent care credit.
There is a limit to the amount of care
costs you use to figure the dependent care credit; this
tax year it could be as much as $3,000. Even then, you
can only claim a percentage of your costs based on your
it's a credit," notes
Roth, "it's a dollar-for-dollar
tax break. There also are
a growing number of elder
care day facilities that would
count toward the credit."
Updated: Jan. 13, 2009