If you have been caring for an older adult, Uncle Sam provides some tax relief by allowing for tax deductions.
Caregiving is a calling and typically doesn't provide excessive income, but thankfully Uncle Sam allows committed providers tax deductions. A recent article in Daily Caring, offers several wonderful tips to maximize your deductions, but they do advise to always consult with tax professionals.
- Create an organized system to help save all caregiving related receipts. It is vital to document all expenses from medical bills, property taxes, transportation, charitable contributions and home modifications for persons with disabilities. Home modifications include things like hand rails, door ramps, and even widening doorways.
- Use health care spending accounts. Flexible and health care spending accounts may cover expenses not covered by insurance. However, this applies only if the taxpayer is responsible for at least 50% of that persons care.
- Deduct medical expenses you paid for. The IRS provides a listing of medical expenses from guide dogs to artificial limbs to ensure you don't miss anything.
- How to handle cost-sharing with siblings. Interesting, when multiple siblings have the pleasure of caring for a family member, the IRS only allows for one to claim their parent on their taxes. Most often, the sibling who provides for 50% or more of their parent's expenses is typically the eligible person. The earlier this is decided in the year, the easier it will be for everyone involved.
Caregiver resource believes it is crucial to be aware of deductions and credits that you might qualify for, but the caregiver should always take time to be organized and never procrastinate. Waiting until the last minute to claim caregiving deductions increases chances for having errors on your tax return and overlooking valuable tax savings.
When in doubt, always refer back to your trained tax professional to help your deductions and tax savings. Caregiving is a calling, but with that special effort of offering compassionate care, the government allows for a few breaks that the caregiver should always take advantage of. You may find additional resources at IRS.gov.