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Deducting Dependents #2: Claiming Elderly Dependents

September 16th

As American taxpayers get older, many find themselves acting as sole caregiver for aging parents. Caring for an elderly relative can be challenging, both emotionally and financially. While the difficulties may seem insurmountable, the IRS has programs available to help ameliorate the financial burden.

So long as your family meets the criteria, tax laws offer several kinds of financial help. The following are a few of the requirements you must meet in order to claim the dependency exemption on your income tax return. While these are some of the hurdles you must overcome, there are others.

It is generally a good idea to consult with a qualified tax attorney before filing to gain some certainty as to whether or not you and your relative qualify.

1. Dependent Income. The first, and most significant, obstacle encountered by many families wishing to claim a tax deduction for an elderly dependent is the amount of income earned by the older relative. A dependent parent cannot earn more than the exemption amount, if your family is to qualify. Though Social Security is typically excludable, other forms of income such as stocks and dividends are often taxable.

2. Pay More than Half the Cost. In order for your family to qualify, you must pay more than half of the support costs of your elderly relative. This means paying over 50 percent of care home costs, nursing fees, food, or medicine. When considering costs, look at whether or not your relative is using their Social Security to contribute funds, and how much.

While this may seem like a steep requirement, it does mean that your parent does not need to live with you in order to qualify as a dependent for tax purposes. However, be aware that the IRS may not agree with every expense you consider a support cost. IRS guidelines in this matter can be difficult to make sense of. Consult IRS Publication 501, Exemptions, Standard Deduction, and Filing Information, or a qualified tax attorney for more details.


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