Part 1: Tax-Time Series – Deductions for Caregivers

As a caregiver, you likely pay for some care costs out-of-pocket.  Did you know that if you are caring for a relative, you canclaim tax deductions and credits for certain medical expenses?  These can include dental treatments, transportation to medical appointments, health insurance premiums, and long-term care costs. The rules below apply to caregivers for the 2012 tax year (filed in 2013).  See IRS Publication 502 for more details:

  • To qualify for caregiver tax deductions and credits, the person you are caring for must be a spouse, dependent, or qualifying relative, as well as a United States citizen or resident of the U.S., Canada, or Mexico. 
  • The 7.5% rule says you can only deduct medical expenses – for both yourself and your loved ones – if these costs exceed 7.5% of your adjusted gross income. 
  • To qualify for a dependency deduction, you must pay for more than 50% of your qualifying relative’s support costs. The relative only qualifies as a dependent if he or she meets the gross income and the joint return test. He or she must not have a gross income in excess of $3,700 and cannot file a joint return for next year. If your relative doesn’t qualify as a dependent because of these tests, you cannot claim a dependency deduction, but you can still claim his or her medical expenses. Part 2 will cover claiming your parent as a dependent.
  • If your loved one is in a wheelchair, the cost of the chair is tax-deductible as long as the use is primarily for the relief of sickness or disability and not strictly for transportation to and from work. 
  • Homecare, nurses, in-home therapists and adult day care expenses are all deductible.
  • If a group of people are sharing costs for a qualifying relative, a multiple support declaration (IRS Form 2120) can be filed to grant one family member the exemption. Anyone who is paying medical and support costs with another person should consult a professional tax advisor.

In the next few days, Parts 2, 3, and 4 of this series will focus on claiming your parent as a dependent, tax-deductibility of long-term care and deductions you can take for legal fees for estate planning. 
At the Fairfax and Fredericksburg Elder Law Firms of Evan H. Farr, P.C., we recognize that caring for another person can be both rewarding and demanding. Caring for a loved one strains even the most resilient people. If you’re a caregiver, take steps to preserve your own health and well-being.  Part of taking care of yourself is planning for your future and for your loved ones. Call us at 703-691-1888 to make an appointment for a consultation. 

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About Evan H Farr, CELA, CAP

Evan H. Farr is a 4-time Best-Selling author in the field of Elder Law and Estate Planning. In addition to being one of approximately 500 Certified Elder Law Attorneys in the Country, Evan is one of approximately 100 members of the Council of Advanced Practitioners of the National Academy of Elder Law Attorneys and is a Charter Member of the Academy of Special Needs Planners.