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"Caregivers: We'd like you to know about your tax breaks"
We all want to provide for our loved ones in their later years with the same compassion and care they provided for us when we were young. Caring for them can be a financial challenge in these difficult economic times. We want you to know there is help through tax breaks for caregivers.
Did you know that:
1. You can claim older adults as dependents on your income tax return if you provide more than half their support. For 2009 taxes, you can claim $3,650/dependent, a $150 increase over 2008.
2. As long as your loved one is your dependent, you can deduct medical expenses you incur for them in a nursing home or rehab center. Be sure to keep track of fees for in-home help, as well, including nurses, home health aides, and therapists.
3. You can deduct caregiving costs on your tax return, including:
a. Doctor visits
b. Surgeries
c. Lab work
d. In-home services
e. Dental work
f. Medical supplies
4. If your loved one cannot travel alone, you can also deduct expenses related to his or her medical transportation, including:
a. Mileage
b. Parking
c. Tolls
To take advantage of these tax breaks, it is important to keep careful records for any item you deduct on your tax return. This includes keeping receipts for medical costs because you can only deduct medical expenses if they exceed 7.5% of your adjusted gross income.
If your employer provides the option of a Flexible Spending Account (FSA), you should consider taking advantage of this benefit as it allows you to put aside pretax dollars to use for medical expenses. Determine your out-of-pocket expenses from the previous year to get an estimate of how much you might spend. You don’t want to put more money in the account than you need for the year because at the end of the year you will lose what you don’t spend.
Finally, it is important to seek guidance from a tax professional with experience in tax regulations related to caregiving and who can update you on any changes in the tax law that may affect your particular situation.
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