Today, there are many baby boomers who have taken on the role of family caregiver to a loved one. It’s a year-round role that can be very rewarding but also challenging, even expensive, if you are helping that loved out financially.
And you might find yourself a little more stressed than usual this time of year – tax season! It’s a time of year when money takes center stage. Combine this already stressful time of year with the stresses of caregiving, and the chances are high you are at your limit… you’re feeling stressed, over extended, and feel as though there aren’t enough hours in the day or dollars in your bank account.
If this sounds like you, there’s also a good chance you haven’t gotten around to filing your tax returns yet because of all your other responsibilities. So, for those procrastinating family caregivers who are still waiting to submit your returns to Uncle Sam, we have some last minute tips that might help increase your refund this year.
1) Family Caregivers Can Deduct Their Loved Ones Medical Expenses:
Both individuals and people who care for qualifying relatives can claim deductions and credits for a range of out-of-pocket expenditures such as dental treatments, cost of transporation to medical appointments, and health insurance premiums.
There are certain rules that need to be followed in order for family caregivers to deduct medical expenses:
o The person you are caring for must be a spouse, dependent, or qualifying relative, as well as a United States citizen.
o There are also rules on how much you can deduct according to your income and age.
o You must pay for more than 50% of your relatives expenses
o If you are sharing costs with other people, you can declare a multiple support declaration.
2) Family Caregivers Can Deduct Their Loved Ones Long-Term Care Expenses
Long-term care medical expenses are deductible if the services are required by a “chronically-ill individual” and a licensed healthcare practitioner prescribes the care. To meet the requirements, a resident must require substantial supervision due to severe cognitive impairment or be unable to perform, without substantial assistance, at least two out of six daily living activities for at least 90 days due to a loss of functional capacity. Activities of daily living are eating, toileting, transferring, bathing, dressing and continence.
These deductions can be extremely helpful to supplement the costs of assisted living if/when the time comes for your loved one. If your loved one is claimed as a dependent, you may also be eligible for deductions. For the senior who is receiving care, the potential savings can amount to more than $10,000 per year!
The rules for family caregivers to deduct their loved ones long-term care expenses are the same as the rules to deduct their medical expenses. The person must be a spouse or qualifying relative, you must pay at least half of your loved ones expenses, and there are certain restrictions on how much you can deduct based on your income and age.
And if this time of year is leading you to feel more stressed than usual, there are some tools that might help you cope, provided courtesy of WebMD.com. Visit the article for full details on each tip:
- Avoid last minute stress by filing early (this ship has sailed if you still haven't filed!)
- If the math and numbers of filing your taxes has you overwhelmed and anxious, hire a professional to file your returns for you
- Communicate with your loved ones about spending habits and have an open dialogue that will help set expectations for your family's spending
So hurry up and get those taxes filed! If you think you would benefit from either of the deductions above we advise you to speak with a tax advisor. They can help guide you in the right direction!