Tax Tips for Caregivers
It’s tax season and you might be wondering if there are any deductions you can file as a caregiver or if you can claim an older adult as a dependent.
Follow these seven vital tips when filing your taxes this season and you’ll be rewarded with a hard-earned refund.
Save all caregiving-related receipts
Just like anything else, always save receipts. And this this case especially if they are related to your duties as a caregiver. This would include any medical bills not covered by insurance, transportation expenses for doctor visits and any home modifications that were medically necessary.
Use a health care spending account
When insurance doesn’t cover certain costs, health care spending accounts come in handy. But this will only work if the taxpayer is responsible for 50 percent of that person’s care.
Understand the IRS rules about dependents
Do you know the guidelines on how to claim an older adult as a dependent? Better yet, did you know that a family member doesn’t need to be living in your home for the entire year? As long as they meet the other guidelines listed by the IRS, you are able to file them as a dependent.
What to do when cost-sharing with siblings occur
When you are dividing the cost between siblings, only one is allowed to claim the older adult as a dependent on their taxes. This would go to the siblings paying 50 percent or more of their expenses. Make sure everyone is aware of this before you file.
Deduct medical expenses you paid for
Once you have claimed the older adult as a dependent, you can also deduct any medical expenses you had to pay for out of pocket. Check out a list of eligible medical expenses.
Change your filing status
If you are unmarried and have claimed your older adult as a dependent, make sure to file your taxes as head of household. Even if your dependent isn’t living with you and you are paying for more than half of their expenses, you can still file as head of household.
Know additional tax credits
Even if you are not providing full caregiver status and have hired someone to help with that care, you might be eligible for a tax credit. As long as you are paying 50 percent or more for the overall care and living expenses, you will be able to claim this credit when you file your taxes.