With cost being one of the largest concerns for people seeking senior living, we want to help caregivers get the most money that they can for their efforts. Below talks about a federal tax credit for elderly dependent care for caregivers. If you want additional information, it can be found here.
The Child and Dependent Care Credit (also referred to as Elderly Dependent Care Tax Credit) is a tax credit for expenses an individual or family incurs for the care of a dependent, or other person living with them so that the taxpayers(s) are free to work elsewhere. Home care or Respite Care are examples of expenses eligible for the Child and Dependent Care Credit Tax Credit.
When used with Respite Care, the tax credit can allow the family to continue working while their loved one receives daytime care at a qualified facility. Remember, this is a tax “Credit” not a tax “Deduction”. This means that if you owe no taxes at the end of the year, but qualify for the credit, the credit amount may be sent to you as a refund. Also, remember that being claimed as a dependent does not jeopardize one’s eligibility for Supplemental Security Income or Medicaid.
Some Qualifications in place to receive this tax credit:
- Age Requirements - there are no age restrictions on either the tax filer or the person in need of care (usually a dependent).
- Disabilities / Health Requirements - the person in need of care must be physically or mentally unable to care for him/her self. Persons who cannot dress, clean, or feed themselves, and those requiring constant attention to prevent injury, are considered unable to care for themselves. A diagnosis of Alzheimer's or dementia does not automatically make one eligible but most individuals with these conditions will meet this requirement.
- Family Status - it is not necessary for the person requiring care to be related to the primary tax filer. However, the qualifying person must reside with the tax filer for at least half of the year.
- Financial (for the Tax Filer) - the individual filing taxes must have earned income for the year and must pay at least half of the support for the qualifying person.
- Financial (for the Dependent or Qualified Person) - the dependent’s gross income cannot exceed $3,950. However, to be eligible for this tax credit, a person requiring care does not have to be a dependent. It is only required that the person cannot care for him/her self, and that he/she live with the tax filer for more than half of the year.
- Other - expenses must be for the care of the qualifying person in order to enable the tax filer to work. The name, address and tax ID number of the care provider must be provided with the tax return.
If you have questions or need specific advice in this matter, we highly recommnend that you call Utah Senior Planning today.
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