As the baby boom generation ages, there are an increasing number of older adults living in the United States. Because of this demographic shift, more and more younger Americans are finding themselves in the position of caring for their elderly parents and relatives.
If you are now caring for older members of your family, it’s important to be aware of the potential tax ramifications. For example, did you know that your parents could potentially qualify as dependents? While people most often think of dependents as minors, this status can be relevant for older relatives as well.
To qualify as a dependent, the following tests must all be met:
- They must be a full-time member of your household OR a relative such as a parent (including stepparents), grandparent, or other direct ancestor.
- They must have a gross income of less than $4,050.
- You must provide 50% or more of their support for the year. (Be aware that your parent’s or other older family member’s funds are not considered “support” unless they are actually spent on the individual’s support during the year.)
Keep in mind that if your parent or other member of your household moves out of your home and into a nursing home in order to receive continuous medical care for an indefinite period of time, that absence may be considered temporary, enabling them to continue to qualify as a dependent.
Still unsure whether you can claim your parent or other elderly member of your household as a dependent on your tax return? Taxation Solutions, Inc. can help you evaluate your specific situation to determine whether dependent status is appropriate for that individual. Don’t hesitate to call today!