Tax Breaks You Should Know About If You Are Caring for Elderly Parents

Over 17 million Americans are actively caring for an elderly parent. Providing care for Mom or Dad is certainly a labor of love, but the labor aspect can become a financial and emotional strain. A study performed by the Urban Institute revealed that long-term care costs for an elderly relative is approximately $140,000 per family. Though costly, there are a few tax breaks that help.

The dependent exemption allows taxpayers to claim up to $4,050 if Mom or Dad qualifies as a dependent for tax purposes in 2017. The child and dependent care credit provides a dollar-for-dollar tax reduction for those individuals who had to pay a caretaker to watch their parent while working or seeking work. To qualify, Mom or Dad must have been mentally or physically unable to care for themselves and must have resided with the taxpayer for at least half the year. With the dependent care deduction, up to $5,000 in wages diverted to dependent care flexible spending accounts can be excluded from taxes. Finally, the medical expenses deduction allows a taxpayer to deduct qualified medical expenses. These costs must surpass 7.5% of adjusted gross income to qualify.  

See Tina Orem, Tax Breaks You Should Know About If You Are Caring for Elderly Parents, MarketWatch, February 13, 2018.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.