When you are a caregiver, the laws surrounding what can be deducted, and the conditions that must be met for the deduction to happen, can be complicated and detailed. This is especially true in cases when the support has complications such as:
- Multiple siblings caring for a parent
- Taxable income that could be moved into tax-free investment portfolios
- Where the dependent may of necessity have to apply for Medicaid
- When you have a caregiver contract in place that allows your ailing relative to compensate you for services related to your status as caregiver.
These sorts of situations muddy the waters of tax deductions. In addition, if you brought in hired help in the form of a professional caregiver to allow you to maintain employment, there is another deduction available—the Child and Dependent Care Credit, which can be up to 35% of any qualifying expenses. If you wish to claim this credit there are more conditions.
- You must have employment-related earnings
- You cannot have payments for care made to another dependent.
- You must be single, head of household, widow(er) with dependent child, or married filing jointly
- The professional staff you bring in must be classified as a qualifying individual
- The dependent must live with you for at least half a year.
Because of these complications, it is vital that you consult a certified tax professional or a qualified elder law attorney before you file for deductions.
