As a caregiver, you put your heart, soul and – quite often – your money into making sure your parent gets the medical attention and support they need. If you’re paying out of pocket to meet those needs, you may be able to claim some of those expenses as deductions on your tax returns.
Here’s what you need to know.
Can I claim my parent as a dependent?
According to the IRS, you can claim a parent as a dependent – even if they’re not living with you – if the following criteria are met:
- You paid more than 50% of your parent’s support during the calendar year.
- Your parent’s gross income for the calendar year was less than the exemption amount.
- You’re not a dependent.
- Your parent isn’t a qualifying child of another taxpayer.
- Your parent doesn’t file a joint tax return, unless your parent and their spouse file a joint return “only to claim a refund of income tax withheld or estimated tax paid.”
- Your parent is a U.S. citizen, U.S. national, U.S. resident alien, or resident of Canada or Mexico.
Can I deduct their medical expenses?
You can deduct certain expenses if:
- You itemize your taxes.
- The expenses were more than 7.5% of your adjusted gross income.
- Your parent was your dependent at the time medical services were provided or at the time you paid for them.
What kinds of medical expenses are deductible?
This isn’t a comprehensive list, but it should give you a good idea of the kinds of expenses to keep track of.
- Caregivers can deduct costs not covered by health care plans for hospitalization, and out-of-pocket costs for doctors, psychiatrists, podiatrists, or other medical services not covered by Medicare or other insurance. You can also deduct dental care, prescriptions, copays, eyeglasses and some long-term care services.
- Caregivers can deduct premiums for qualified long-term care insurance and health insurance premiums not paid for with pre-tax dollars.
- If they’re required for medical care, you may also be able to deduct the costs for housing, food, clothing, transportation to the doctor and some home modifications.
- Programs for weight loss, alcohol treatment or smoking cessation may be deductible if they’re part of a treatment for a specific disease. Wigs for hair loss due to medical treatments or conditions may also be deductible.
- If your parent moves to an assisted living or continuing care retirement community, a portion of their entrance fees and monthly fees may be deductible. Be sure to get documentation from the community about what percentage of those fees can be allocated as medical expenses.
Tips from an expert.
Christopher Karachale, partner and tax attorney at Hanson Bridgett LLP, says that it’s up to you to take advantage of the tax benefits available. “Talk to your tax preparer about medical expense deductions,” he says. “Don’t just assume something is or isn’t deductible.”
With the new tax law now in effect, he says it’s important to ask your tax preparer whether it makes more sense for you to claim the standard deduction rather than itemized medical expenses.
“For many people, the standard deduction has doubled,” says Karachale. It’s now $12,000 for individual filers, and $24,000 for joint filers. “The math can get complicated, but there are some situations where the medical expenses aren’t that high, so it makes more sense to take the standard deduction instead.”
He also encourages you to keep all of your receipts and documentation. “Keep every single piece of paper for at least three years. The more you can preserve, the better.”
If you haven’t already filed your 2018 taxes, now’s the time to gather those documents and find out if itemizing medical expense deductions is right for you. If you’ve filed already and missed out on some tax savings, start keeping track of 2019 medical expenses now – because you deserve all the breaks you can get.