As people live longer more and more we find that we have to care for our parents who are too able and healthy to be placed in a nursing home.
You may find yourself caring for your parent or parents and paying for medical expenses.
If so you may be able to take a medical expenses deduction on your taxes.
You may have an old parent who has an income that is too high to qualify as a regular dependent, but you could be providing over 50% of their support.
If that is the case, the medical expenses you pay on their behalf are deductible on your tax return."
To the extent they exceed 7.5% of your adjusted gross income. As an alternative, you can pay for the dependent care with pretax dollars.
This method is restricted to defined limits.
You'll have to participate in your employer's flexible spending plan.
You have to ask your employer to deduct the money from your paycheck before taxes are applied.
When you submit vouchers for the qualified dependent care expenses, you will get your money back.
Choose between the tax credit and the flexible-spending account.
One or the other, but not both. Do the numbers and calculate where you stand.
Usually if, you spend more than $2,400 and you're in the 25% tax
bracket or higher, the flexible-spending account, will serve you better.
If you and your sibling(s) are sharing the costs of taking care of your parent and together you contribute more than half of your parent's total support, then one of you can claim a dependency deduction.
Each sibling has to pay for more than 10% of the parent's support.
Each one has to sign the IRS Form 2120 which is a Multiple Support Declaration.
Submit that together with your IRS Form 1040.
It would be good to learn about the Long Term Care deductions, as well.
A lot of people break out in a nervous sweat and get the shakes when it comes time to file their taxes.
The first time that I tried to file by myself left me with a feeling of confusion because I did not bother to read any information about how to go about it in a fair way, a way that didn't leave me broke and living in a cardboard box in the alley.
I just had at it without reading anything and it was overwhelming. I assure you that after all these years I won't get into a difficult situation like that without any proper info and good forms to file.
Some folks just file as fast as they can to get it over with. They loose out on a bunch of legitimate deductions and allocations that could have saved them a ton of money at tax time.
I would rather be getting a nice tax refund than pay the IRS a lot of money. Pay attention to the details.