Do you have an adult dependent who needs care? Let’s say your 92-year-old mother can’t be left alone, so you hire someone to ‘mama sit’ when you leave the house to shop, etc. The cost of the care is either a deductible expense or a care credit.
When you must have someone in your home taking care of your parent, obviously, there is a medical reason. Well, at least it’s obvious to you and me. Not so to the IRS. So, make sure you get a letter from the doctor spelling out that they need this care for medical purposes.
Once you’ve established that, since these expenses are for a parent, your Mom or Dad does not need to live with you to be considered a dependent by IRS.
If your parent qualifies as your dependent because you provide more than half of their support, you have two options for dealing with the cost of someone who provides in-home care that way. In fact, you may use both options.
1) There is the Child and Dependent Care Credit on Form 2441. Notice that the title includes more than just a ‘child.’ You may use up to $3,000 of the total expenses for the parent or child or $6000 for two or more dependents. The credit percentage ranges between 20 percent and 35 percent, depending on your income level. IRS Publication 503 explains how it all works.
Naturally, you will have spend much more than that. Right? Let’s say you spent $12,000.
2) So, take the rest of the expenses and use them as medical expenses. You used $3,000 towards the dependent care credit, so you have $9,000 left towards medical expenses. Add in all the insurance, Medicare premiums and mileage to the doctor, and you might have enough medical expenses to generate a deduction!
Remember, though, when your mom-sitter works in your home, you’ll have all kinds of payroll issues.
If you get the care by dropping Mom or Dad at a senior day care facility, be sure to get the place’s federal ID number.
Already filed? Use federal form 1040X to amend your original return and claim the deduction.
Joseph Reisman, of Joseph S. Reisman & Associates, has been serving tax prep and business accounting expertise from his Coney Island Avenue office for more than 25 years. Check out the firm’s website.