Caregiving can be an expensive and time-consuming task. Thankfully, many caregivers are eligible for tax deductions, exemptions, and credits. If you are caring for an elderly loved one, here are a few ways you can maximize your tax deductions.
Save Care-Related Receipts
Document all of your caregiving expenses. Many expenses, ranging from safety modifications to the home to transportation costs, qualify for deductions. Save receipts so you can access them when it’s time to deduct expenses on your tax form.
Consider hiring a professional caregiver if you need some time off from your caregiving duties to work out your tax obligations. Anchorage home care experts are available to provide high-quality care to seniors on an as-needed basis. From assistance with mobility and exercise to providing transportation to the doctor’s office and social events, there are a variety of ways professional caregivers can help your aging loved one continue to live independently.
Claim Your Loved One as a Dependent
If you qualify, you may be able to claim your loved one as a dependent, which will greatly increase your personal deduction. Even if your loved one lives in a separate house, you may be able to claim him or her as a dependent. To meet the criteria, your loved one needs to be a legal resident, within the taxable income cutoff, and unable to file his or her own tax return. If you plan to claim your loved one as a dependent, you will need to prove that you paid for more than 50 percent of his or her yearly living expenses.
Deduct Medical Expenses
After you claim your loved one as a dependent, you can deduct medical expenses from your taxes. At the beginning of each year, check to see what expenses the IRS considers acceptable deductions. The expenses might range from hearing aids to in-home care. There are also small, inexpensive items acceptable for deduction that you should add to your deduction list, like bandages.
Look into the Child and Dependent Care Credit
If your loved one’s annual income exceeds the allotted maximum, you cannot claim him or her as a dependent. In these circumstances, many caregivers take advantage of the Child and Dependent Care Credit, which can be used if your loved one has lived with you for six months or more. The credit was designed for working caregivers who spend money on in-home care or adult day care services.
If private home care costs are deductible, you can easily hire an in-home caregiver without incurring additional tax burden. Families looking to hire an Anchorage caregiver can reach out to Home Care Assistance. All of our hourly and live-in caregivers receive extensive ongoing training to ensure they provide the high-quality in-home care seniors need and deserve.
Use a Flexible Spending Account
Many caregivers use flexible spending accounts, which place a portion of their pre-taxed income into a medical savings plan. A flexible spending account allows you to use untaxed dollars to pay for your loved one’s medical expenses. If you don’t currently use a flexible spending account, consult with your employer about the option.
Talk to a Tax Expert
Consulting with a tax professional is one of the best ways to maximize tax deductions. Before meeting with a tax professional, make sure to organize all your caregiving-related expenses, receipts, and financial information, as this will give the tax professional the information he or she needs to successfully prepare your taxes. Because tax professionals have a greater understanding of different tax laws, they may be able to find unique ways to maximize returns, from changing filing status to finding credits that offset care costs.
Caring for a senior loved one can be a difficult task, especially if you simultaneously have to manage your finances and taxes. Families who find it difficult to care for their aging loved ones without assistance can benefit greatly from professional respite care. Anchorage, AK, family caregivers who need a break from their caregiving duties can turn to Home Care Assistance. Using our proprietary Balanced Care Method, our respite caregivers can encourage your loved one to eat well, exercise regularly, get plenty of mental and social stimulation, and focus on other lifestyle factors that promote longevity. To learn about our premier in-home care plans, give us a ring at (907) 770-0907 today.