Is This Tax Deductible? Caring for a Loved One

Being a family caregiver can be lonely sometimes, but know that you are not alone. There are 53 million people in the U.S. who provide caregiving to an adult family member or friend.

Caregiving can not only be time-consuming but also expensive. Costs of medical expenses,therapy, co-pays,deductibles, and transportation to get to doctor’s appointments add up quickly. And if your loved one is one of the million seniors residing in 31,000 assisted living facilities across the country, the costs are even greater.

Thankfully, expenses you incur to care for your loved one may be tax deductible if they qualify  as your dependent and you itemize your deductions on Schedule A, rather than taking the standard deduction. In order for your loved one to qualify as your dependent, they must meet certain qualifications and the medical expenses incurred must meet IRS standards to qualify for the medical expense deduction.

Typical deductible medical costs include prescription drugs, doctor and hospital costs, medical supplies, dental and eye exams and treatments, transportation to get to medical appointments, and health insurance premiums including Medicare Part B that is deducted from Social Security payments. Long-term care is also deductible if your loved one is in a facility primarily to receive nursing care. If your loved one is in a facility primarily for custodial care, then only the costs related to medicalcare is deductible.

Deductibility floor. If medical expenses incurred to care for your loved ones qualify, the total unreimbursed medical expenses you paid have to be greater than 7.5% of your adjusted gross income for the year.

Residency rules. To qualify as a dependent, the person you are caring for must be a United States citizen or resident of the U.S., Canada, or Mexico.

Relationship tests. You can claim tax deductions and exemptions if your loved one is a spouse, dependent child,step-child, parent ,stepparent, aunt, uncle, niece, nephew, father-in-law, mother-in-law, daughter-in-law, brother-in-law, or sister-in-law. If they don’t fall into one of those categories, they must have lived with you for the entireyear.

Dependency deduction. You may claim your loved one as a dependent on your tax return if you pay for more than 50% of their support, they don’t have income over $4,700 for the year, they don’t file a joint tax return with a spouse, and are not claimed by anyone else.

Record-keeping. If you benefit from itemizing your deductions and can claim your  medical expenses, you must be able to show that you incurred the expense. It is important to keep receipts or other proof of payment, and this proof must include information that shows what and who the payment was made for.

Don’t worry about figuring out whether you can claim your loved ones as a dependent and whether the medical costs incurred qualify as a deduction for you. TurboTax will guide you through simple questions and determine the tax deductions and credits you’re eligible for, making it one less thing you have to worry about.