Should the government give you a tax credit when you have to spend money to take care of Mom or Dad's needs so you can go to work? Rep. Barbara Lee, D-Calif., thinks it should. I do, too.
Congresswoman Lee introduced a bill last week to provide caregivers a tax credit for qualified expenses paid to take care of aging parents, even when the parents aren't classified as dependents of the taxpayer. Called the Elder care tax credit, the bill is designed to ease the financial burden on the growing number of families with multi-generational caregiving responsibilities. It's designed to build on the existing Child and dependent care credit.
"My Elder care tax credit will give families more financial flexibility as they juggle work and care-giving responsibilities for aging relatives," Lee states in a press release. "Caregivers would receive a credit worth up to $1,200 per year. This tax credit would be an important step in ensuring all families have the resources to adequately provide for care-giving expenses."
According to Lee, caregivers spend $5,530 annually on average for the care of aging relatives. "As a result, many caregivers have reported cutting back on their own health-care spending, or reducing hours at work, to provide their relatives with the care they need," she said.
Not a new idea
The idea of a tax credit has been around for a while. The Third Way, a think tank, published an idea brief on the topic back in 2009, and related bills have been introduced in current and past sessions of Congress. I asked Kay Bell, Bankrate's tax expert and a former member of the Treasury's Taxpayer Advocacy Panel, what she thought of the bill's odds of becoming law in this session of Congress.
She sees it as a good bill since more and more working adults are dealing with the needs of elderly parents, and she finds it encouraging to get the dialogue started. But she doesn't see much chance of the bill passing this year.
A tax credit reduces the amount of taxes paid, versus a tax deduction, which reduces the amount of income subject to tax. Taxpayers typically prefer a credit over a deduction.
What do you think? Should the government help your adult children out when they are helping financially with your care?
Read more about the Child and dependent care credit.
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