If you supported one or both of your parents financially last year, Uncle Sam may be willing to share the cost when you file your 2012 tax return.
It’s officially tax time, and if you have been caring for an elderly parent you may find that Uncle Sam can help with some of those costs through favorable tax treatment. Depending upon your circumstances, you may be able to claim your parent as a dependent, take a dependency care tax credit, deduct a portion of their medical expenses or get some combination of these tax breaks.
Forbes offers guidance on whether you might qualify in a recent article “How To Claim Tax Breaks For Supporting Your Parents." If you think you may qualify, consult an accountant or tax professional to maximize your tax savings.
Sadly, caregiving frequently also means managing end-of-life care … and the attendant expenses. While it may be difficult to focus on financial matters during these stressful times, tax breaks can help extend available resources. Of course, the first step is to determine which expenses qualify and to what extent. Expenses that frequently apply to people with advanced illness include health insurance premiums not paid through work, deductibles, co-pays, medication, alternative care, medical supplies such as bandages, dental care, Medicare B premiums, lodging while traveling for care, and transportation costs. The IRS has a very detailed list of what is and isn’t deductible in Publication 502. You can refer to this publication for details, as well as to another excellent Forbes article, “Save Money On Taxes At The End Of Life — How And Why It Matters.”
Again, be sure to consult your accountant or tax professional if you think you may have qualifying expenses. The tax savings could be significant, and could help ease an otherwise difficult burden.
References: Forbes (January 29, 2013) “How To Claim Tax Breaks For Supporting Your Parents”
Forbes (February 4, 2013) “Save Money On Taxes At The End Of Life — How And Why It Matters”