Updated for Tax Year 2017
OVERVIEW
If you cared for an elderly parent, your parent may qualify as your dependent, resulting in additional tax benefits for you.
The first thing that often comes to mind when considering dependents
is the parent/child relationship. In many cases, parents claim their
children as dependents until they become adults. It also works the other
way around. If you cared for an elderly parent, your parent may qualify
as your dependent, resulting in additional tax benefits for you. Once
you determine that both of you meet IRS criteria, you can claim your
parent as a dependent on your tax return.
Income imitation
Your parent must first meet income requirements set by the Internal
Revenue Service to be claimed as your dependent. To qualify as a
dependent, your parent must not have earned or received more than the
exemption amount for the tax year. This amount is determined by the IRS
and may change from year to year. Current exemption amounts can be found
in IRS Publication 501, Exemptions, Standard Deduction, and Filing
Information. Generally, you do not count Social Security income, but
there are exceptions. If your parent has other income from interest or
dividends, a portion of the Social Security may also be taxable.
Support requirement
You must have provided more than half of your parent's support during
the tax year in order to claim them as a dependent. When determining
the monetary value of the amount of support you provide, you need to
consider several factors.
Calculate the fair market value of the room your parent occupies in
your home. Ask yourself how much rent you could charge a tenant for the
space.
Next, consider the cost of food that you provide. Don't forget to
include utilities, medical bills and general living expenses that you
also pay. Compare the value of support you provide with any income,
including Social Security, that your parent receives to determine
whether you meet the support requirement. The amount of support you
provided must exceed your parent's income by at least one dollar.
Deducting medical expenses
If you paid for your parent's medical care, you may be able to deduct
the expenses. You can claim medical expenses as an itemized deduction
on Schedule A. Itemized deductions are beneficial when they exceed the
amount of the standard deduction you are allowed to claim. Total medical
expenses, including the cost of prescription drugs, equipment, hospital
care and doctor's visits, must exceed 7.5 percent of your adjusted
gross income for you to claim these medical expenses for 2017 and 2018.
The IRS understands the heavy burden that medical expenses sometimes
create and has made an exception for this deduction.
You can deduct your parent's medical expenses even if she does not
meet the income requirement to be claimed as your dependent as long as
you provide more that half of their support.
Beginning Jan. 1, 2019, all taxpayers may deduct only the amount of
the total unreimbursed allowable medical care expenses for the year that
exceeds 10% of their adjusted gross income.
Dependent care credit
The child and dependent care credit is a non-refundable tax credit.
It can be claimed by taxpayers who pay for the care of a qualifying
individual and meet certain other requirements. If your parent is
physically or mentally unable to care for himself, he is a qualifying
individual.
In order for you to qualify for the credit, you must meet certain
requirements. You need to have earned income and work-related expenses
to qualify. This means that the care must have been provided while you
were either working or looking for work. In addition, you must be able
to properly identify your care provider. This includes giving the
provider's name, address and identifying number (either Social Security
number or employer identification number). If you are married but file a
separate return from your spouse, you may not claim this credit.