Tax Breaks Available For Supporting Parents
Due to the recent recession and the rising costs of healthcare, it is not unusual for adult children to be providing significant financial support for parents. The good news is that the federal government provides several ways for you to get a tax break for this support, including:
Claiming a parent as a dependent. If the support you provided in the past year equals more than half your parents' annual income, you may be able to claim that parent as a dependent on your federal return and reduce your taxable income by $3,800. To be able to claim a dependency exemption, your parents' gross income cannot exceed $3,800, not including Social Security benefits. If you and your siblings split the support, you must have provided more than 10%. Your parents do not have to live with you to claim this deduction.
Dependent care credit. If you have been responsible for paying adult day care expenses for a parent, you may be able to write off 20-35% of those expenses up to $3,000. However, you cannot take this credit if you paid your spouse to provide the care or if you cared for your parent yourself.
Medical expenses. If you can claim your parent as a dependent and you paid medical expenses for that parent during the year, you may be able to deduct those costs as well. However, you can only write off medical expenses - including yours and your parents - that exceed 7.5% of your adjusted gross income.
The Flanigan Law Group provides Southern California residents with personal attention for estate planning, administration and litigation legal services. When disputes between families, arise, they are very successful in resolving legal estate issues quickly and efficiently while preserving financial and emotional resources. Contact the Flanigan Law Group at 949-450-0042.