The out-of-pocket cost for a senior’s medical expenses can add up quickly. After an illness or a fall, the amount not covered by Medicare or insurance can be shocking. The ongoing expenses of a chronic condition may reach hundreds of dollars each month, if not more. Did you know that, as a caregiver, you may qualify for tax benefits if you’re spending money out of your own pocket to cover these expenses?
Qualifying for Dependent Status
In order to claim your loved one’s medical expenses on your taxes, he must first qualify as a dependent. The criteria set out by the IRS says that the senior must be related to you or your spouse; he must live in the US, Canada, or Mexico; he must have a gross income of less than $3,900 each year (excluding Social Security); and you have to provide at least half of his financial support. It’s important to note that your loved one does not have to live with you to qualify.
Qualified Medical Expenses
Once your loved one qualifies as a dependent, you’re eligible to receive tax breaks based on her medical expenses. In order to do this, you will need to itemize the medical costs when you file your taxes. According to the IRS, eligible expenses include the following:
- Fees from hospitals and doctors
- Assisted living costs
- Transportation to medical care
- Home health care visits
- Prescription drug expenses
- Costs of home modification for accessibility and safety
- Personal care items
Not all the money spent on these medical expenses can be deducted from your taxes. Instead, only the amount that exceeds 10 percent of your adjusted gross income can be written off. For this reason, you may want to consider discussing your situation with a tax professional or having your taxes filed by a trusted accountant. Remember that you won’t receive the tax break on medical expenses that have been covered by Medicare or private insurance policies.
Similar Tax Breaks
You may also be eligible for other tax breaks when you claim an aging family member as a dependent. This includes the Child and Dependent Care Credit. This credit can be used in conjunction with the medical expenses credit to save you even more money. For example, the cost of home care can be written off as a care credit or as a medical expense. In most cases, you will want to write it off as a care expense. Because this credit is limited, however, the remainder over the limit may be written off as a medical expense.
If you believe your loved one may qualify as a dependent, you should talk to a financial advisor or consult a tax preparation professional to learn more about the benefits of claiming your senior on your taxes. Being a caregiver can be both emotionally and financially stressful, but the tax benefits available for medical expenses can help.
