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Claiming Parents on Your Taxes and Their Deducting Medical Costs

February 14, 2012 | Comments: 0 | Views: 125

The baby boomers are hitting retirement age in huge numbers over the next 10 years. Couple this with the stock market performing in a horrid manner over the last decade and low interest rates on savings and you have lots of children that may have to provide care for their parents. The question arises, can I claim my parent as a dependent? Also, if I can't meet the test for dependency, can I claim some of their medical expenses on my return if I pay them? Hopefully, I can provide some helpful answers.

Congress is aware that many adult children provide for their parents. The tax law allows for some help to those caring for the folks who raised them up as a child. Even if your parents do not live with you in your home, you may be able to claim them as a dependent or claim some of their medical bills you paid provided certain criteria are met.

We will go over medical costs later in this article because your parent does not have to be your dependent to claim them, but here are the key guidelines for dependency:

1. The parent must be a US citizen or permanent resident;

2. He or she must have a valid SSN;

3. They must be legally recognized as your parent;

4. They must not be required to file an income tax return and did not file one claiming themselves, this means that they have income other than Social Security of less than $8,000 if eligible to file Single or $19,000 if eligible to file Joint in 2012;

5. He or she must get more than 50% of their support from you, their child.

Please keep in mind that if several children are helping out their parents, only one can claim the elderly parent as a dependent per year. And if doing so, must have provided over 50%. If you are your parents are in an adult daycare, you may be able to claim a tax credit of 20-35% of the cost depending on your income subject to maximum limitations.

Now for the info on medical deductions. If your parent isn't considered an eligible dependent for tax purposes simply because he or she earned too much but met the other tests, the IRS allows them to be included as a dependent for medical deduction purposes. This means you can add the medical bills you paid for them to your Schedule A (Subject to the 7.5% limitation and the Standard Deduction). Besides doctors, dentists, medicine etc., don't forget premiums for supplementary Medicare coverage or long-term care insurance if you paid them for your parent.

One word of advice at closing, if you are confused about this and lets face it, Congress makes taxes confusing, see a tax professional. Take your return to a CPA or Enrolled Agent (EA). Enrolled Agents are Tax Experts and usually fairly affordable.

James Robert Coleman, E.A., A.T.A. Enrolled Agent & Accredited Tax Advisor Member: National Association of Enrolled Agents Former IRS Revenue Officer, GS-11

Source: EzineArticles
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