Share This Article

Tackling Tax Season

By Jennifer Bradley, Staff Writer

If it's a live-in situation, a reasonable amount of the mortgage, utilities and other household costs will determine the level of support being provided.

To qualify as a dependent, however, a loved one does not have to live with a caregiver. If he or she is able to be in their own home, or in an assisted living/nursing facility, the costs a caregiver pays still can count toward the IRS support requirement for a dependent.

The same sentiment applies when a caregiver is paying for a loved one's care while they work, whether care is being received at home or a facility. Look at IRS Publication 503, Child and Dependent Care Expenses to research this topic further.

For live-in caregivers, another tip to remember is that many home modifications made specifically for a (dependent) loved one's ability to live in a home safely can be tax deductible. The installation of a wheelchair ramp, widening doorways, bathroom renovations, etc. can be considered. The amount allowed is the cost of the modification decreased by any increase to the value of a home.

Shared responsibility

A very common trend is for siblings to share the financial responsibility for a parent or other elderly family member. If a group of people is sharing the cost burden for a loved one, the person providing more than 50 percent of the support can claim the dependent.

A piece of advice professionals offer is for family members to discuss the situation ahead of time so everyone is on the same page come tax time.

If no caregiver pays that half of the support themselves, IRS Form 2120 explains how to handle multiple-support declarations.

Hiring help

If a caregiver has arranged for another person to be the primary caregiver, there are tax breaks available as well. Whether using a caregiving provider, or independent person, these expenses can be deductible.

Any costs with helping of daily activities such as dressing, eating, toileting, etc. can be counted as medical expenses if they add up to 7.5 percent of a caregiver's adjusted gross income. IRS Publication 502: Medical and Dental Expenses explains these in greater detail.