Not all caregivers can get tax breaks

USA Today
Jul. 15, 2007 09:42 PM

If you’re supporting an elderly parent, you may qualify to claim that parent as a dependent or seek other deductions on your tax return. For tax year 2007, claiming an additional personal exemption would reduce your taxable income by $3,400. But to claim this tax break, you must pass the following tests:

• Income. To qualify as a dependent, your parent’s income can’t exceed the amount of the personal exemption. For 2007, the cutoff is $3,400. In most instances, Social Security benefits aren’t counted. But if your parent receives more than $3,400 from other sources, such as pension benefits, interest and dividends from investments, or withdrawals from retirement savings plans, you can’t claim them.

• Support. In addition to the income test, you must provide more than half a parent’s costs for food, housing, medical care, transportation and other necessities.
If your parent lives with you, you can include a percentage of your mortgage, utilities and other expenses in calculating how much you contribute to her support. You can find a worksheet in IRS Publication 501, available at www.irs.gov.

• Medical deductions. Even if you can’t claim your mom as a dependent, you may still get a tax break for helping pay her medical costs. To claim this deduction, you still must provide more than half your parent’s support, but your parent doesn’t have to meet the income test.

Children who pay for a parent’s care in an assisted-living facility could also qualify for a deduction.

Most administrators of these facilities will break out how much of the monthly payment goes toward medical services as opposed to food and other amenities.

The portion that goes toward medical care is deductible once your total medical expenses exceed 7.5 percent of your adjusted gross income.