Caregivers who are adult children or other non-spouse relatives also can claim breaks for expenses incurred in caring for someone with a chronic condition. To do so, however, the caregiver must be able to claim the individual as a dependent.
To be eligible, the caregiver — say, the adult child — must provide more than half of the parent’s total support for the year. Support could include expenses for medical treatment, food and transportation. A relative could be living in a nursing home or an assisted-living facility. Plus, the ill person’s gross income must be less than $3,800 in 2012 ($3,900 in 2013), not including Social Security and tax-free disability payments.
If your relative passes these tests, you can claim a dependent exemption, worth $3,800 in 2012. You also can deduct medical expenses for the parent’s care and be eligible for a dependent-care tax credit. In the case of deducting a dependent parent’s medical expenses, the parent’s income can exceed the $3,800 gross income limit.
You may be able to use your employer-based flexible spending account, which allows you to pay for out-of-pocket dependent care or medical expenses with pretax dollars. In 2013, you can designate up to $2,500 to a spending account. Rules vary by employer.
However, claiming your parent as a dependent in order to secure tax breaks may not be the right move. If a parent can afford to pay for nursing-home care, for example, there may be no reason to fork over the money simply to claim a medical write-off.
Also, if your parents need nursing-home or assisted-living care but don’t have the money to pay for it, they will likely qualify for Medicaid. “A thorough analysis of the family’s income and assets should be performed to determine the best option for paying for long-term care,” says Phillip Sanders, a certified public accountant and chief executive officer of ElderCareMatters.com, an online directory of elder-care experts. At that point, he says, an adult child can decide whether to pay the expenses (and claim the deduction) or have the parents spend down their resources to qualify for Medicaid.