Tax Tips for Elder Caregivers

A special thank you to Minda Cutcher,MBA,Financial Advocate for Seniors, for allowing us to share her expert information with all of our readers.

If you are caring for an aging relative who qualifies as your dependent, you may be able to claim medical expenses you incurred as a result of that care on your income tax.
•Medical insurance premiums (unless pre-tax)
•Prescription medicines
•Doctor bills
•Hospital fees
•Travel to and from medical appointments

Only those expenses paid during the tax year are deductible for that year. Also, expenses are limited based on your adjusted gross income (AGI). For 2011, medical expenses must be in excess of 7.5% of AGI. You can only claim those amounts for which you have not been reimbursed by private insurance or Medicare. Additional special expenses, such as wheelchairs and repairs, ambulance services and oxygen may also be claimed. Check with your tax advisor for the current list of items that fall into this category. Improvements to your home made for medical reasons may also be deductible, but may be limited based on whether they increase the value of the home. Certain structural improvements to accommodate disability, such as the following, are fully deductible regardless of home value impact:

•Ramps
•Widened doorways and hallways
•Railings and grab bars
•Lifts (but not elevators) and
•Warning systems

Other items that may be deductible:

•Special equipment or hand controls in a car
•Medical expenses incurred in a nursing home
•Medically related nursing, therapeutic and or/aide services

Here are a few publications offered by the Internal Revenue Service that may help you understand the deductions available to you. These can be ordered by phone 800-TAXFORM, or online at www.irs.gov.

•Publication 502 – Medical and Dental Expenses
•Publication 554 – Tax Guide for Seniors
•Publication 907 – Tax Highlights for Persons with Disabilities
•Publication 929 – Tax Rules for Children and Dependents

Every situation is unique, so be sure to check with your tax advisor. To learn more...