Fantastic tax information for children caring for their parents from Aging.com

Posted by on Apr 11, 2012 in CHC News, Current Events | Comments Off on Fantastic tax information for children caring for their parents from Aging.com

Fantastic tax information for children caring for their parents from Aging.com

Rosanne Roge, Dec 9, 2011

Rosanne Rogé joined R.W. Rogé & Company, Inc. in January 1995. She is a graduate of C.W. Post – Long Island University. Ms. Rogé is certified by The Certified Financial Planners Board of Standards to use the professional certifications CFP and Certified Financial Planner. She is also a Certified Senior Advisor (CSA).

You may be able to claim your Mom as a dependent on your tax returns if you pass the IRS’s Dependency Test. If your Mom meets the IRS’s Dependency Requirements, you’ll be able to claim an added personal exemption on your income tax return. The exemption amount is adjusted annually for inflation and can be found on your tax return form. Second, you can count any medical expenses you pay for mom towards another itemized deduction. Since medical costs must exceed 7.5% of your adjusted gross income before you can claim them, your Mom’s added expenses could help you meet the requirement. When adding up those parental medical costs, don’t forget premiums for supplementary Medicare coverage or long-term care insurance.
And the IRS offers a little leeway here. If your parent isn’t considered a dependent for exemption purposes simply because he or she earned too much income (see dependency test #1) but met the other tests, the IRS says mom still could be counted as a dependent for medical-deduction purposes.
Another additional tax benefit is available for people whose dependent adult parents live in their home. If the adult child works (or is looking for work) and has to pay for care of the parent to make their own employment possible, the expenses can qualify for the dependent care credit or for pre-tax payment through an employer-sponsored flexible spending arrangement (FSA). This tax break phases out with your income, so check with your tax adviser.
Last, if you are working at a company that offers a plan that allows for pre-tax deduction of dependent care and/or health care expenses, you can use those dollars for items not eligible for the Medical Expense Deduction or for relief if you will not be able to itemize. This is a great way to get your tax break now instead of later, so be sure to take advantage of it.
The IRS website, www.irs.gov or IRS Publications 501 and 503 provide information on the Dependency Requirements as well as any Exemptions you may claim.

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