Taxes 2024: Can I Claim My Parents as Dependents and Is It Worthwhile?
With rising costs, it’s becoming more and more commonplace for adult children to care for their aging parents. As reported by A Place For Mom, as of 2023 the monthly cost for a semi-private room in a nursing home is $7,908 and the average monthly cost for a private room is $9,034. These prices are enough to send your finances into a tailspin.
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If you’re providing significant financial support to your parents, you might wonder if you’re eligible for a tax break to help subsidize your costs.
The answer to this question: It depends on several factors, according to TurboTax.
How Much Financial Support Do You Provide To Your Parents?
Support comes in many forms: emotional, spiritual and financial to name a few. However, the only type of support that the IRS will consider is the financial kind.
Your financial support must be at least half of the cost of what it takes to make sure your parents are taken care of. The cost includes any money spent on items such as food, shelter, clothing and medical care. It’s important to note that if your support is not at least 50% of the total, you cannot claim your parents as your dependents on your tax return. Most of this discussion focuses on each parent, individually, though it can also be applied to both parents should they both require care.
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Where Do Your Parents Live And What’s Their Income?
In addition to the percentage of financial support you must provide to claim your parents as dependents, there are additional qualifications. Each eligible parent must be either a U.S. citizen, U.S. resident alien, U.S. national, or resident of Mexico or Canada. If your parents earn more than the allowable gross income for the tax year in question ($4,700 per parent in 2023), then they would not be eligible to be claimed as a dependent by anyone else. In most cases, their Social Security income does not count toward the $4,700 limit.
If you have people in your life who are “like parents” to you and you’d like to claim them as your dependents, they’ll need to live with you the entire year. Your actual parents would not have to meet this same requirement.
Benefits Of Claiming Your Parents As Dependents On Your Tax Return
Here are two benefits of claiming your parents as dependents on your tax return:
Lower Tax Rates: You’ll benefit from lower tax rates applied to your taxable income since you’ll be permitted to file as head of household (rather than single status) if these two conditions are met: You’re unmarried on the last day of the year — and qualify to claim your parents as a dependent.
Tax Credits: If your parents are unable to take care of themselves and you pay someone to take care of them while you’re at work, you likely qualify for the dependent care tax credit. The expenses related to their care are written off as qualified medical expenses as an itemized deduction on your tax return.
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This article originally appeared on GOBankingRates.com: Taxes 2024: Can I Claim My Parents as Dependents and Is It Worthwhile?
