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.
Be careful, 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." Check IRS 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 contributions.
Counting medical 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 the requirements.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.
When adding 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 income level.
"But since 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."