There are many of us who look after our aged parents. Well, this can really prove to be a great thing to us when speaking of taxes. As long as you and your aged parents meet the required criteria, tax laws are ready to offer you help. In order to receive any kind of tax help from the IRS regarding your elderly parents, you will have to make sure that you can claim that person to be dependent on you. Apart from this, any dependent must meet certain tests.
What are the hurdles faced while proving dependency?
There are various hurdles which one has to face while claiming tax benefits after caring for the aged. One of greatest dependency hurdle is the income that your aged parents have. There is a certain exemption amount and the income of the dependent parent cannot exceed that. While calculating their income, even the social security income should also be taken into account. Moreover, our parents have saved quite a lot of money in stocks, bonds and savings account. Thus, it becomes very difficult to claim that they are dependent. Thus, it becomes difficult to claim the tax deductions.
How much support should parents get from you?
In order to claim that your parents are dependent on you, it is mandatory for you and your parents to prove that half of their monetary support comes from you. Unless you're able to prove this, you won't be able to claim the tax benefits. If they pay their daily necessities with their social security income, then they are not completely dependent on you. In order to know what support is, you can check out IRS Publication 501, Exemptions, Standard Deduction, and Filing Information.
Can medical and other costs be claimed under itemized deductions?
Once you find that your parents haven't qualified the IRS test for dependency, you can claim the medical expenses that you incur for your parents toward itemized deductions. Here, you should note that the medical costs must exceed 7.5% of your adjusted gross income so that you can claim them. If you add your parent's added expenses, it could help you meet the requirements. You can even claim the dependent care credit if your dependent parents live with you and are in need of continual care.