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Tackling Tax Season

By Jennifer Bradley, Staff Writer

(Page 1 of 4)

Life is expensive. Being a caregiver can be another added expense to your monthly budget, even if a loved one has independent financial stability.

There are a variety of situations that a caregiver can find themselves in during this seasonís tax time. The level of tax deduction you might be eligible for depends on the amount of care a caregiver is providing throughout the year. Some long-term costs such as transportation, insurance premiums and prescriptions can be deducted as medical expenses. For a caregiver to qualify for specific tax deductions or credits, the person being cared for must be a spouse, dependent, or qualifying relative. A qualifying relative includes any person who resided with the caregiver all year as a member of the household.

Caregivers must first know what will benefit them and then, make sure to meet with a qualified attorney or accountant who can guide them through the process come tax time. The major rule to remember is that expenses can only be deducted if they exceed 7.5 percent of a caregiver's adjusted gross income, which as a person ages, can add up fairly quick.

All or nothing

Is a loved one considered a dependent? This is the first question a caregiver must answer. There are a number of tax benefits available to a primary and even more for a live-in caregiver.

In order to qualify for a dependency deduction, a caregiver must be paying for more than 50 percent of the relative's support costs. (The gross income and joint return tests will tell if the person qualifies as a dependent. A loved one must not have a gross income in excess of $3,800 and cannot file a joint return. Social Security is normally excludable.)

An important thing for caregivers to know, though, is that even if the loved one does not meet the dependency requirements, a caregiver still has options to claim medical expenses (if they meet the 7.5 percent requirement).

The financial support provided which qualifies a caregiver for deductions includes food, housing, medical, transportation, etc. Long-term care medical expenses including diagnostic, preventive, therapeutic, curing, treating, mitigating, rehabilitative, and maintenance and personal care services.

 

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