An increasing number of individuals are caring for elderly parents and the costs can add up. Many people overlook the deduction when filing their income taxes. There is definitely an elderly care tax credit, but it represents a highly complicated set of rules. Unlike most credits, the individual doesn’t have to qualify as a dependent, but they can be.
In 2021, you could claim up to $4,000 in elderly care costs for one individual and up to $8,000 when caring for two people or more. Costs can include medications, medical care, exams, therapy, and mental health support.
Expenses can also encompass meals and household services, along with qualifying long-term care services. Dental care, transportation, recreational activities may also qualify. There are very specific rules governing whether you can claim it.
The person being claimed must have lived with you for at least six months during the year. They must be physically or mentally unable to care for themselves. Only one sibling may claim the deduction, and the parent must be a legal resident, U.S. resident alien, U.S. national, a resident of Canada or Mexico, the Republic of Panama, or the Canal Zone. They’ll also need valid ID and Social Security number.
Your parent’s gross income must be less than $4,300. You may also claim an elderly care credit if you hire an in-home caregiver. If you plan on claiming the credit, it’s best to consult with a tax accountant to determine if you’re eligible and if specific conditions and costs qualify.
Seniors and Spouses
If you’re a senior residing in an assisted living or long-term care facility, you may be able to claim a variety of deductions. IRS rules are different for individuals claiming the expenses for themselves vs. a child claiming the deductions for a parent. There are also precise rules for spouses. The rules are complicated and will also depend on who is actually paying the costs.
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