For some people, taking care of their elderly parents is an added burden on the already difficult financial challenges they have to go through with their own families. However, very few may not have heard or understood the advantages of looking after their parents especially with the IRS allowing taxpayers to claim their parents as dependents on their tax return. Of course, just like everything else related to tax, you will have to qualify and meet the requirements and as soon as those requirements are provided, you can expect an additional tax break. This policy was designed to help offset the costs you have incurred in caring for your parent. Awesome, right? You will not only have the chance to spend time with your parents, you’ll be able to enjoy a significant tax refund as well. An extra personal exemption is given to every dependent claimed on your taxes which means a good amount of money you can deduct from your income reducing your tax liabilities.
So how will you know if you qualify to claim your parents as dependents and what are the requirements? We will discuss them in this article as brief but accurate as possible.
Cover Your Parent’s Support Costs
In order to meet the IRS support requirements that will allow you to claim your parents as a dependent when filing your tax return, you have to cover 51% or more of their support costs. You must spend for their food, housing, clothing, and medical services expenses to be able to cover the required percentage. A Multiple Support Declaration form is required to be filled up if your parent is supported by a group of individuals or family members. Doing this qualifies a single person in the group to claim your parent as a dependent and therefore have that person granted a tax break during the season.
Residency and Relationship Requirements
The technical term “Qualifying Relative” is used by the IRS to meet the relationship requirement on tax and life situations. Therefore, it doesn’t matter if you're caring for your parents, in-law, or grandparent as long as they are biologically related to you, by adoption or through marriage. Along with the relationship, the requirement is the residency requirement which requires the person you are caring for to meet certain criteria. He or she must be a:
You don't have to ask your parent, in-law or grandparent to live with you as well compare to a non-relative.
Gross Income and Social Security Requirement
An SSN or a social security number is required from your parent if you want to claim him or her as a dependent when doing your tax return. Another option is providing an ITIN or an individual tax identification number. Whichever of them you can provide will meet the requirements as mandated by the IRS.
Earning not more than $4, 050 for 2017 tax season, on the other hand, is required from your parent is he or she wants to be claimed as a dependent. If your parent earns more than the said amount, you will not clear to claim them as a dependent. Don’t include Social Security in your parent’s taxable income because of its considered a non-taxable income by the IRS. Your parent will also not be allowed to file a joint tax return if he or she wants to be claimed as a dependent.
You Can Only Claim A Dependent
Claiming your parents as a dependent will mean that you cannot be eligible as a dependent on someone else’s tax return. Among the many requirements, the IRS will ask from you is that you cannot be claimed or qualify to be a dependent. You don’t have to worry because as soon as you meet all the requirements, you will surely receive a huge tax exemption on your tax return.
Including Medical Expenses On Medical Deductions
Before you start calculating your medical deductions, be sure to include your parent who is now your dependent’s, medical expenses. If you parent has to have assistance when you’re away, you are eligible to claim the Dependent Care Credit. It’s best to consult a tax professional for you to better understand the tax deductions and credits you qualify for.
