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Tackling Tax Season

By Jennifer Bradley, Staff Writer

(Page 3 of 4)

There are some things to be aware of, however, as a caregiver. First, whatever extent medical or long-term insurance covers these things, that level of care can't be deducted.

The loved one also must be chronically ill and a health care provider (licensed) has to actually prescribe a plan for care. Many people may want to arrange for the care on their own, but if their loved one is not monitored and care not prescribed, there is no tax benefit allowed.

Chronically ill is defined as when a person is unable to perform at least two of the six activities of daily living: eating, toileting, transferring, bathing, dressing or continence. Someone who has cognitive impairment and requires a good amount of supervision also meets that standard.

An idea worth noting about situations where a loved one is living in a facility of some sort is: if they are there ONLY for living, and not medically induced reasons, only medical expenses are deductible. If they are living there for primarily medical reasons, the service and housing expenses count toward the total. 
 
Resources

Tax rules are complex either way. Itís important for caregivers to consult a tax accountant to truly take advantage and have knowledge of the intricate tax laws.

Here are some tips, as offered by Michigan's Caregiver Resource Network: 

  • Organize Early
    Keep receipts for medical expenses, property taxes, charitable contributions, prior tax preparation expense, income, bank statements, etc.

  • Don't Procrastinate
    A caregiver is already on limited time, so doing things last minute will increase chances of mistakes and missing potential credit and/or deductions available.

  • Free Information
    The IRS offers a plethora of free information to help educate caregivers on regulations, and provide tax forms. Teletax Service (1-800-829-4477) offers recorded messages and the IRS staffed help line is available at 1-800-829-1040. Information can also be found at www.irs.gov.

  • Dependent?
    A caregiver must know the dependent guidelines, and make sure to take those credits when they can.

  • Get Help
    Local libraries and post offices carry tax forms and information. Many local organizations also offer free advice. Ask at your county or state aging resource center.

 

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