Resources for Family Caregivers of Older Adults

Search Senior Care Corner

Tax Benefits to Lighten Financial Load of Family Caregivers (at Least a Bit)

Tax Benefits to Lighten Financial Load of Family Caregivers (at Least a Bit)

  • Print Friendly and PDF

The end of the year is upon us and hope for what the new year will bring.

Once we get the celebrations behind us, it’s time to start thinking about getting our income taxes done and filed.

Sorry, I don’t mean to spoil your fun!

On the bright side, there are tax savings for which you might be eligible as a caregiver.

They are going to make you reach, but just might be of some help in meeting the financial costs of caring for a senior loved one.

Remember, tax laws are complex and we don’t know which tax breaks may be applicable to you but want to point you in the right direction to find out.

Tax Credits for Caring

Family caregivers can get credits on their personal taxes for caring for a dependent senior and should include these benefits when completing tax returns.

Generally, the person for whom you care should be living with you, dependent on you for care or you provide more than half of their support during the year in order for you to claim tax credits.

Tax deductions and credits may be available for people who care for elders who have a chronic disease documented by a medical professional within the last 12 months.

Family caregivers who provide care for qualifying relatives can claim deductions and credits for a range of out-of-pocket expenditures such as:

  • Dental treatments
  • Cost of transportation to get to a medical appointment
  • Health insurance premiums
  • Long-term care services

According to the IRS, medical expenses include the costs of diagnosis, cure, mitigation, treatment, or prevention of diseases, and the costs for treatments affecting any part or function of the body.

For a full list of allowable medical expenses, see IRS Publication 502 at www.irs.gov.

Cost of Caregiving

The unpaid cost of caregiving for those providing care has been estimated to total $395 billion a year!

As a caregiver, you often pay many expenses straight out of your pocket with no help from medical insurance or the seniors for whom you care.

The cost of care is very high, especially when caring for a person with dementia in your home.

For example, a homemaker can cost $19 an hour and a home health aide can cost $21 an hour — or more. These costs can add up quickly over the course of a week or month, especially if they help when you can’t be there.

There are costs that many family caregivers may not realize are affecting their finances including:

  1. lost wages
  2. your own medical costs due to the strain on your physical and mental health
  3. future employability, failure to get promotions, re-entering the workforce if leave for caregiving
  4. loss of retirement savings or Social Security credits (47% of caregivers surveyed have used up most or all of their savings)

These costs are often not felt immediately but are uncovered over the long term.

It is important for family caregivers to protect their own financial status and one way is to gain all the tax benefits you can from your role as caregiver.

Costs* You Have Paid This Year May Be Eligible For Tax Credits

Be aware that some of these change year to year so check them out before getting to work on your taxes. If you use a paid preparer, be sure to address these.

  • cost of medical insurance premiums, including long term care insurance
  • prescriptions, doctors bills unpaid by insurance, hospital fees not covered by insurance, dental treatments
  • payments made to in home caregivers for medical or nursing care
  • transportation costs to receive medical care and appointments, including a mileage deduction if you or your senior do the driving
  • in-home specialized care such as physical, occupational, or speech therapy
  • personal care items such as diapers, briefs, or special foods
  • costs of facility care, such as assisted living or nursing care, if for medical purposes rather than personal care
  • aging in place in-home modifications you have made, such as ramps, grab bars, stair glides, wider doors
  • dentures, glasses, prosthetics, Braille books
  • equipment such as oxygen supplies, wheelchair, hearing aids, and batteries

(*medical costs typically can be deducted if they are over 10% of your adjusted gross income; check with your tax preparer or IRS materials for full details)

The AARP also offers free assistance and tax tips for seniors through its Tax-Aide program. You can look for a preparer in your area using the AARP locator.

Don’t forget to investigate which of these costs are also deductible on your state taxes.

Many states allow deductions for medical costs for caregivers in addition to your federal taxes.

Remember, though, tax laws are complex and mistakes are easy to make — and may be very costly.

If you are not sure if an item is deductible, check with the IRS or your own tax expert.

Once you investigate all the options available to you and your senior to get the credits you deserve, you will be happy you did!

Happy New Year!


4 Responses to Tax Benefits to Lighten Financial Load of Family Caregivers (at Least a Bit)

  1. Should a family member be able to come in all of the sudden and take my mother who is 78 and was diagnosed with dementia back in 2013 to a lawyer with her will to have it changed and to change the way my mother originally thought when she prepared her will? Also getting a dpoa for health and Financial which used to be me all the time up until now put her name on my mother’s checking account should she be able to do it how can I get my family to realize she has dementia? Any other numerous items in situations to for complicated to discuss but I need someone to come in and help me before they take everything I feel that I have earned. I have never charged my mom anything since 2012.
    What can I Do?

    • Diane, it is important to know that a person with a diagnosis of dementia can be determined to not be competent to make any changes to their will or advance directives. I would consult with your attorney or an elder law attorney who can advise you about the condition of your parent and your state’s regulations which can vary. You may need some input from her doctor or neurologist about her diagnosis and its affect on her power to make competent decisions. You can also have your mother declared legally incompetent and seek guardianship so that there is no elder abuse or coercion perpetrated upon her. If she lives in a facility instead of at home, the ombudsman can help you as well. We wish you good luck to protect the best interests of your mom! It is alarming the incidence of financial elder abuse occurring especially by family members in our nation.

  2. This caregiving tax break is one of the most overlooked deductions. Caregivers miss this only because they don’t know that caregiving expenses are eligible for tax deductions. I’ve created something similar to this, and my aim is to help caregivers who are struggling to support the care needs of their aging parents financially. I also included tax breaks you can get from long term care insurance premiums, which have limits depending on the age of the taxpayer at the end of the tax year. This information is helpful, which can help a lot of family caregivers today considering that adult children taking care of their aging parents are becoming a common scenario in American households.

    • Thank you Samantha, we agree that it is important not to overlook any financial benefits for which you are entitled as a caregiver!

We'd love to hear your thoughts!





Get Weekly Email Updates


 
 
Proud to be included as #3!