You can reduce the cost of caring for an aging parent by claiming your parent as a dependent. This allows you to deduct many expenses, from medical payments to utilities, and receive significant tax relief.
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Things you need
- Proof of rent and utilities
- Medical bills
Claim your elderly parent as a dependent if his income is less the $3,300 a year, and he is a U.S. citizen or meets a resident citizenship test.
Determine how much you spend on living expenses for your elderly parent. To be able to claim her, you have to show that you pay half of her yearly living expenses. This includes basic shelter or rent (including other bills), meals and clothes. You can also claim medical bills and expenses that your parent's insurance does not pick up.
Add your parent's room and board into the cost for expenses. Your senior parent does not have to be living with you in order for you to claim him. However, if he does, consider deducting the area of the house he occupies to the list of expenses.
Evaluate your parent's medical bills. Even with Medicare or other insurance, medical bills add up. These bills can include premiums, co-payments for prescriptions, medical visits and rehab therapy. Generally, deducted medical or dental bills should be over 7.5 percent of the adjusted gross income and must be itemized.
Claim any expenses for healthcare or living space. Many older adults need assisted living or require care at a nursing home. You can claim this, or any monetary aid you supplied to your parent for living or moving to a home, as a deduction.
Keep records of any home improvements made due to caring for an elderly parent. This might include wheelchair accessible entrances, bathrooms with special accommodations or installing an elevator system. Some of these expenses might qualify if they add to the value of the home and are needed for medical purposes. You also can claim other miscellaneous expenses, such as transportation and nurse salaries.
Tips and warnings
- When calculating your elderly parent's gross income, know what you can include. An older person's allowable gross income ranging from tax-free interest and disability compensation to social security does not fall under the IRS definition of gross income.