Life presents a strange, intriguing cycle. It appears that often the people that help us grow up and take care of us are also the people that we find ourselves assisting later in life.
Do you find yourself taking care of an ailing mother? What about a father?
The IRS can reward your selflessness. Parents can qualify as your dependent, though many taxpayers overlook this detail. How does the process work—and what are the eligibility requirements?
Parents Claimed as Dependents
Parents claim their children all of the time on a tax return. Yet not nearly as many children do the same for their folks. However, if you spent a considerable amount of time, money, or energy taking care of a suffering father or mother this past year, you are entitled to the same tax benefits.
While it may be the last thing on your mind to get a tax break because of an ailing parent, the IRS actually provides three different forms of assistance:
- Personal Exemption
- Dependent Care Credit
- Medical Expense Deduction
What tax exemption, credit, or deduction should you consider? Are you eligible to claim all three? Like anything involving the IRS, there are criteria that must be met across all three forms of assistance.
The Income Rule
Here’s the first thing that needs to get established: does the parent meet income requirements that are established by the IRS?
In order to qualify as a dependent, the father or mother cannot have earned or received more than the exemption amount for the tax year. The amount is not fixed; it changes yearly and is decided by the federal government.
The IRS usually doesn’t require Social Security income to get counted against this eligibility, yet there are some tricky scenarios where that is not the case. You also must consider income from dividends or interest related to other income sources.
A licensed tax professional can help answer your questions regarding income eligibility for a senior that might qualify as your dependent.
If your mom or dad passes the income stipulations then the next thing you must consider is personal support. Did you provide for your mom more than half of the tax year? What exactly does the IRS define as “support”?
Once again, it gets a little complicated—yet the primary deciding factors are if the person lived with you for more than half the year, if you spent your own money for more than half their food, and so on.
In order to give yourself the best odds of qualifying a parent as a dependent, don’t forget to factor in the cost for utilities and other general living expenses.
So long as the calculated amount of support you provided exceeds your parent’s income by at least one dollar, you will pass this requirement.
If you paid money out of your own pocket for a father or mother’s medical care, then you may also be eligible to deduct the expenses.
Claimed medical expenses are done so via itemized deduction on Schedule A Form of the IRS. The one exception is if you believe the amount will not exceed the standard deduction amount, which is rare considering how costly medical bills are for loved ones.
Medical expenses include the cost of prescription medications, hospital care, medical equipment, and doctor’s visits.
The total amount in medical bills must exceed 7.5 percent of your adjusted gross income. However, it is worth noting that even if the parent does not meet these criteria, he or she still can be claimed as a dependent if more than half of their support was provided by you.
But to make things even more difficult, those rules will change for the 2019 tax year, so it depends if you are trying to claim a dependent from a previous year—or the upcoming one.
Tax Education with Levy & Associates
Sometimes, it is evident a father or mother qualifies for the child and dependent care credit, as well as other tax exemptions for yourself. Sometimes it is not. You can get more information regarding your specific circumstances by calling 800-TAX-LEVY or visiting www.levytaxhelp.com. We provide free initial consultations!