Are You a Family Caregiver? Save Money with these Important Tax Tips
A recent and very timely article on the website Next Avenue could save you a lot of money – and potentially a lot of trouble – at income tax time, if you are a caregiver for an older family member. The article is called “Tax Rules for Family Caregivers,” and you can read it by clicking here.
According to the article, Pew Research has reported that about one in seven “Sandwich Generation” adults is financially assisting both an adult child and an aging parent. While these caregivers usually remember to claim their dependent children when they file their taxes, they are often unaware that the expenses incurred in caring for their parents may also be deductible. The article recommends – and we agree – that you talk over the specifics with a qualified tax preparer. But with Income Tax Day coming up soon (on April 18 for most Americans in 2016) this article contains some timely tips and helpful links. Here are a few guidelines from the Next Avenue piece:
• For starters, in order to deduct 2015 caregiving costs for a qualified family member, you must have paid at least 50 percent of the costs of his or her care. It’s also important to note that your loved one does not have to have been living with you in your home. The 50 percent figure refers to medical costs, not custodial expenses, and there is a list of qualifying services and other factors you’ll need to take into account in order for these costs to represent a deduction for you.
• The person you cared for cannot have been claimed as a dependent on someone else’s tax return.
• The person you cared for must meet stringent income requirements as well as requirements of citizenship and residency.
Here at Aging Options we will be happy to sit down with you and review your situation to see if it meets these and other necessary criteria. If it does, you may be surprised at some of the care costs you can deduct. Mileage, for example, is deductible at a current 2015 rate of 23 cents per mile. So is some of your travel expense, something of particular interest if you are among the estimated eight million caregivers who live at significant distance from those they are caring for. The cost of some required home improvements and the amount paid for long-term care services may also qualify for deductions. There are helpful links in the article that explain some of these stipulations.
There’s more to this article, including a few tax traps to avoid when hiring a family member as a caregiver. The important thing is to be aware of the possibility that some of your expenses incurred in caring for Mom or Dad may very likely be deductible. Even as you bear the emotional burden of being a caregiver, it’s good to know that at least some of the financial burden might be able to be lifted.
No one wants to be a burden to their loved ones as they age. Avoiding this unhappy fate is one reason we strongly recommend you have a LifePlan in place – a comprehensive plan for your retirement that will help you protect your assets, avoid burdening those you love, and avoid unplanned institutional care. To help you get started, we offer free LifePlanning Seminars at locations around the Puget Sound region. Space is limited, so click on the Upcoming Events tab on this website and register for a seminar near you. It will be a pleasure to work with you in planning for a fruitful and rewarding retirement.
(originally reported at www.nextavenue.org)