Caring for an Elderly Relative? You May Be Entitled to Tax Breaks

Taking care of a relative can be a fulfilling and rewarding experience. An additional benefit is you might also qualify for various tax breaks. 

How to Qualify for a Caregiver Tax Credit

Tax credits aren’t the primary reason you provide care, but if you qualify for various caregiver tax deductions, you should, by all means, claim them. 

To qualify for a caregiver tax credit, you must add your loved one as a dependent in your income tax report. However, you must prove that:

• You and your spouse — if filing jointly — are not dependents of another taxpayer.
• If your parents are married, they aren’t filing a joint return unless they’re filing together only to claim a refund of estimated tax paid or withheld income tax.
• Your dependent is a U.S. citizen, national, resident alien, Canadian or Mexican resident.
• You paid over 50% of your parent’s support for the calendar year.
• Your dependent’s gross income for that calendar year was no more than $4,700.
• Your dependent isn’t a qualifying child of an existing taxpayer.
• Your foster parent has been living with you all year round as a member of your household in your main home.

How Does the Caregiver Tax Credit Work: Optimizing Tax Benefits

Optimizing caregiver tax benefits involves understanding these three effective taxation principles:

• Staying informed: Tax laws and regulations can change anytime, so staying informed is crucial in optimizing your caregiver tax benefits.
• Keeping detailed records: Ensure you have detailed records of caregiving expenses such as medical bills, care services and other relatable costs.
• Consult professional accountants: Tax professionals and accountants help break down complex tax laws and eligibility criteria for caregiver tax credits.

How Much Is the Caregiver Tax Credit?

The caregiver tax credit deduction can range between $600 and $1,050 for every dependent you’re taking care of, depending on the tax credit you’re filing for and your adjusted gross income.

Let Us Help You Get the Tax Benefits You Deserve

Getting your well-deserved tax breaks is crucial for planning your income. If you need assistance optimizing your caregiver tax credit, SD Mayer is here to help. Contact us today for an in-depth analysis of the caregiver tax benefits you should be earning.