If you are caring for an elderly parent, you are definitely not alone. In fact, according to a study conducted in collaboration with the AARP, 29% of the U.S. population provides care for at least one aging, chronically ill or disabled family member or friend at any given time. Along with concerns about your loved one’s health and wellbeing, you are probably also dealing with increasingly complex financial issues. Filing taxes for your senior parent can seem like a difficult prospect, but it doesn’t have to be.
Determining the Need to File Taxes for your Senior Parent
In many cases, seniors are not required to file an income tax return because their income falls below the IRS filing requirements. First, determine your parent’s gross income, to determine if they meet these requirements. This will include any income received that is not exempt from tax, not including Social Security payments.
There are some special circumstances, however, that require individuals to file an income tax return, even if their gross income falls below the IRS requirements. The IRS provides information on common scenarios where these exceptions apply, and working with an accounting firm experienced in filing taxes for seniors can prove helpful in making the right determination.
If you’ve determined the need to file, you may run into difficulty deciding how to file, particularly if your parent is recently windowed. In some cases, a surviving spouse may file a joint return, receiving the deductions for the spouse who has passed.
Can Parents Be Claimed as a Tax Deduction?
In some cases, the answer to this question is yes. It’s a good idea to reach out to an accounting firm to ensure that you are filing properly. There are many deductions that seniors may be eligible, particularly if they have a condition, such as Alzheimer’s, which is considered a disability. Even individuals who have not formally retired may be eligible for specific deductions because of their disability.
In order for you to claim a parent as a dependent, they must meet the IRS income requirements discussed previously. You must also have provided over half of your parent’s support over the tax year to be eligible to claim them as a dependent. This can be determined by evaluating the room that you provide for your parent and the costs associated with expenses like food, utilities and living expenses. The amount of support provided by you must be more than your parent’s income.
If you contributed to your parent’s medical expenses, these may also be deducted, in some cases. If an individual requires special care, you may also be eligible for the child and dependent care credit. If your parent cannot care for him or herself due to physical or mental concerns, and you have earned income and work-related expenses, chances are, you’ll qualify for this credit.
Doing some research can make a big difference, when it comes to filing income taxes for your senior parents. Just as important is partnering with financial professionals who can help you make wise decisions. An experienced accounting firm can provide valuable feedback to ensure that you are there for your parents emotionally and financially.
Our knowledgeable and experienced CPAs will help answer any questions you may about filing taxes for your senior parent. Contact us to discuss your questions and concerns at (925) 933-2626 or, email us at firstname.lastname@example.org.