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January 04, 2022

5 Tax Tips For At-Home Caregivers

Tax Tips for At-Home Caregivers

Caring for an aging parent or loved one can be both demanding and rewarding. If your loved one is living with Alzheimer’s or dementia and part of an Alzheimer’s home care plan, it can also be financially difficult for you, even if your parents are helping pay for some of the expenses. Caring for Parkinson’s patients at home requires patience and organization. It also means that you need to understand your loved one’s finances to better care for them.

That’s why as a caregiver, you should be looking into ways to reduce your annual tax burden. Did you know that there are actually tax benefits for home health care if you know how to report it correctly? Do you and your family qualify? Here are a few tax tips for those participating in-home care, whether it’s home care for Alzheimer’s patients or simply taking care of a parent or loved one as they age. 

1. Maintain Meticulous Records

In order to be able to write certain expenses off during tax season, you’re going to need to keep solid records of everything you’ve spent pertaining to your caregiving. What kind of receipts should you keep track of? That’s a great question. For starters, if your loved one has any medical bills that aren’t covered by health insurance, you should be holding onto those receipts. This could pertain to medication or medical equipment that you purchase out of pocket. 

Keep track of transportation costs associated with visits to the doctor, as you may be able to write those travel expenses off. Finally, if your loved one requires home modifications for safety and accessibility, you may be able to get money back if you keep those receipts. 

2. Consider Claiming Your Parent As A Dependent

Did you know that you might be able to claim your loved one as a dependent on your taxes? Even if you don’t live together, you may still qualify. One of the biggest qualifying factors for claiming your parent as a dependent is proving to the IRS that you provide 50 percent or more of the money they require for their care. If you’re assisting your loved one financially you may consider speaking with an accountant. If you’re assisting with living expenses, like mortgage payments, medical care, and other kinds of daily care, like food, clothing and transportation, it may be time to consider your options.

In the case that you’re taking care of a non-family member, you may still be able to claim them as a dependent. Your non-family member would need to qualify as low-income and have lived with you for at least one year. To clarify, qualifying as low-income excludes disability payments and social security. Check the IRS’ guidelines for more information about the tax benefits of home health care

3. Speak With Your Siblings About Cost-Sharing

Only one person can claim your parent as a dependent, even if you’re cost-sharing. The sibling who is providing that 50 percent of financial care will be the one who qualifies for the claim. Make sure you’re openly discussing with your sibling who will be paying for what expenses, and do the math together in order to see who qualifies. It’s very important to be on the same page when it comes to your parents' care, especially if you’re hoping to utilize the tax benefits of home health care that the government provides. Hiring a professional to assist you in making these financial decisions is a great route for those who aren’t familiar with navigating end-of-year taxes. 

4. See If You Qualify As Head Of Household

If you’re caring for a loved one who is living with Alzheimer’s or another form of dementia you may be able to legally file as head of household. Filing taxes as the head of household has its benefits. In order to file as a head of household, you need to have a dependent and be unmarried. Filing as a head of household can mean that you get a lower tax rate and maybe even a higher standard deduction. If you qualify, consider altering your status in order to get the most out of your situation. 

5. Hiring Help? You Can Write That Off Too

If you’re caring for a Parkinson’s patient at home and you require professional help, you may be able to write some of those costs off as well. The same goes for Alzheimer’s home care. You may not be able to provide the constant care required, because you need to be able to hold down a part-time or full-time job. If you need to bring in a home care worker to provide services while you’re at work, you may be able to get a tax credit. You can soften the costs of home care expenses by seeing what types of care you can write off. 

These tips simply scratch the surface of the tax benefits of home health care. Talk to a professional to fully understand how you can get the most out of your taxes as a caregiver. Remember to save your receipts, talk openly to family members who are also providing care and do your research to get the most out of your financial situation. 


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