If you have an elderly parent living with you, you may be able to claim your parent as a dependent, which can benefit both you and your parent. You may be at that stage of life where you find yourself in a role reversal. The parent who once cared for you, and who once claimed you as a dependent on their tax return, is now looking to you for care in her old age.
To Claim Head of Household
When you claim head of household, it’s because, typically, you are a single or divorced parent who has dependent children. But that is not always the case. Tax laws allow you as a single taxpayer to claim a parent who is dependent upon you for support, as long as you and your parent meet specific qualifications.
There are three requirements you must meet to claim yourself as head of household with a dependent parent, according to the Internal Revenue Service. Those are:
- You are unmarried or considered unmarried by the IRS on the last day of the year.
- You can claim a dependency exemption for your parent.
- You paid more than half the cost of keeping up a home for your parent for that tax year.
So if you’re filing your taxes for 2018, your parent must have been dependent on you for more than half of his support for the year. Also, keep in mind, your dependent parent does not have to live with you.
Filing as head of household will give you a higher standard deduction, which will help you out when paying your taxes. The head of household tax filing status will also help alleviate some of the costs you are bearing as you support your elderly parent. Caregiving can be an expensive proposition, consequently, these tax advantages will help. A 2016 AARP study found that family caregivers spent almost $7,000 per year to care for elderly parents or nearly 20 percent of their annual income.
Your Parent as a Dependent
Your parent needs to be considered your dependent for you to be head of household. There are a few more requirements for the IRS to consider your parent to be your dependent.
- You cannot be another taxpayer’s dependent.
- If your parent is married, they must not file a joint tax return, unless the dependent parent files 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, a resident immigrant or a resident of Canada or Mexico.
- You paid more than half your parent’s support for the calendar year.
- Your parent’s gross income for the year was less than the exemption amount, which for the tax year 2018 is $4,150 and for 2017 is $4,050 per year.
- Your parent is not a qualifying dependent of another taxpayer.
- If your dependent parent is your foster parent, they must have lived with you all year as a member of your household.
Income Limits for Dependents
Again, unless you are claiming a foster parent, your parent doesn’t have to live with you to be a dependent and for you to claim head of household. Your parent can live in an assisted living home, a nursing home or elsewhere. You only have to be providing more than half of their support during that year. Your parent’s Social Security income doesn’t usually count toward their income total, although there are a few exceptions. If your parent has income from interest or dividends, some Social Security income may be taxable.
People on Social Security pay taxes usually if they have substantial income in addition to Social Security benefits. That includes wages, self-employment earnings, interest, dividends and any other taxable income.
If you and your siblings are paying the support of your parent, you can fill out IRS Form 2120, the Multiple Support Declaration, and you can alternate who claims your dependent parent. But you cannot file as head of household if you do this.
To calculate the monetary value of support that you have paid to care for your parent, you need to consider a couple of things. One is the fair market value of the room your parent occupies if they live with you. That can be calculated using the figure you would charge if you were to rent out that room.
Also include food, utilities and general living expenses. Then add up the amount of income your parent brings in, including Social Security. As long as you provide at least one dollar more of support, your parent can be considered your dependent. You can also deduct their medical expenses using Schedule A.
For 2017 and 2018, you can deduct medical costs that exceed 7.5 percent of your adjusted gross income. Medical expenses include doctor visits, prescriptions, equipment and hospital visits. For the tax year 2019, you may deduct only the total medical care that exceeds 10 percent of your adjusted gross income.
You can also claim a portion of long-term care premiums. A portion of the money spent on these premiums is deductible, depending on the age of your parent.
Tax Law Changes for 2018
When you file your taxes in 2018, a lot has changed. So if you are planning to file as head of household with a dependent parent, you will find that the standard deduction has changed considerably. If you are filing as head of household, you can claim a standard deduction of $18,000. That’s a significant advantage over married couples who file jointly and singles who file. The standard deduction for singles is $12,000, while married couples can claim $24,000, which, in effect, is doubling the deduction for singles. So filing as head of household gives you a considerable tax advantage over most people.
To help you determine your filing status, you can go to the IRS What Is My Filing Status website, where you can take a short quiz to see whether you can be considered a head of household. You’ll need your marital status and, if you are widowed, your spouse’s year of death. You’ll also need the percentage of costs that any household members paid toward keeping up your home.
Also in 2018, you will not be able to claim a $4,150 personal exemption for your elderly parent if you are taking the standard deduction. This tax loss, however, will for most people be offset by the higher standard deduction.
Another change for your 2018 taxes is you can qualify for a $500 family tax credit for taking care of an elderly parent. As head of household, you should be able to qualify, because you will likely have paid taxes. The credit can only be used to reduce taxes; it can’t be used to increase a tax refund for someone who has no tax liability. This will also help the majority of taxpayers, including heads of household, who will find it's no longer advantageous to deduct because of higher standard deductions.
For Your 2017 Taxes
For those who are filing 2017 taxes, your standard deduction is much less – $9,350 for heads of households – but you are more likely to claim deductions. You can still claim the $4,050 personal deduction for your qualifying elderly parent. You will not get the $500 family tax credit; that’s new for your 2018 taxes.
- Turbo Tax: Steps to Claiming an Elderly Parent as a Dependent
- Internal Revenue Service: For Caregivers
- A Place for Mom: How the New Tax Bill Affects You
- IRS: What is My Filing Status?
- Social Security Administration: Benefits Planner -- Income Taxes and Your Social Security Benefit
- Credit Karma: Caring for Loved Ones? Tax Tips for Caregivers
- AARP: The Cost of Family Caregiving: Out of Pocket Spending Surprisingly High