Taking care of your elderly parents is a difficult job, especially if they need help paying the bills. To help taxpayers with these costs, the IRS offers a few tax write-offs for caregiving children. While these write-offs are not enough to cover all your bills, they provide a nice helping hand by helping offset some of your expenses.
Unfortunately, there is no tax write-off for paying your parents' daily living expenses. This includes spending on food, utilities, transportation and housing. You need to handle these bills on your own. There is also no write-off for the hours you spend taking care of your parents.
One tax benefit for caregiving children is that they can their parents as dependents. To claim this extra dependency exemption, your parents must be leaning on you heavily for money. You need to be providing at least one half of your parents' income for the year. In addition, your parents' taxable income for the year must be less than $7,400. If you clear these hurdles, you can claim your parents as dependents. This gives you an extra $3,700 deduction for one parent and $7,400 for two parents.
You could qualify for another write-off if you are paying your parents' medical bills. To get this write-off, your parents must be considered your medical dependents. This is a little easier than becoming regular dependents. For your parents to be your medical dependents, you must provide at least half their income for the year. It doesn't matter how much money they make themselves as long as your provide at least half of the money for their medical bills. In this case, you can deduct any of your parents' medical bills for the year that exceed 7.5 percent of your adjusted gross income.
Dependent Care Credit
If you hire someone to take care of your parents, you could get another write-off through the dependent care credit. This credit must be used against the cost of hiring a dependent care worker. You cannot use this credit for the hours you spend as a caregiver yourself. You can deduct up to $3,000 of these expenses a year for one parent. You can deduct up to $6,000 if both of your parents need dependent care. This credit gives a nice discount against the cost of a dependent care worker.
David Rodeck has been writing professionally since 2011. He specializes in insurance, investment management and retirement planning for various websites. He graduated with a Bachelor of Science in economics from McGill University.