Today TaxMama hears from Jo Ann in Missouri who tells us, “I was watching the Early Show and watched a tax expert who was talking about deductions of which people may not be aware. At the very end, he mentioned that if you have an adult dependent that needs what my friend calls “mamma sitters”, the cost of the care is either deductible or a possible care credit. Since I have a blind, ninety year old dependent mother for whom I must have a “mamma sitter” when I have to leave the house to shop, etc., I am quite interested in this issue.
Dear Jo Ann,
When you must have someone in your home taking care of your parent, obviously, there is a medical reason. Well, at least it’s obvious to you and me. Not so to IRS. So, make sure you get a letter from the doctor spelling out that they need this care for medical purposes.
Once you’ve established that, since these expenses are for a parent, your Mom or Dad does not need to live with you to be considered a dependent by IRS.
If your parent qualifies as your dependent because you provide more than half of their support, you have two options for dealing with the cost of someone who provides in-home care that way. In fact, you may use both options.
1) There is the Child and Dependent Care Credit on Form 2441. Notice that the title includes more than just a ‘child’.
You may use up to $3,000 of the total expenses for the parent or child. ($6000 for two or more dependents) .
The credit percentage ranges between 20% and 35%, depending on your income level.
IRS Publication 503 explains how it all works. http://www.irs.gov/publications/p503/index.html
Naturally, you will have spend much more than that. Right? Let’s say you spent $12,000.
2) So, take the rest of the expenses and use them as medical expenses.
You used $3,000 towards the dependent care credit, so you have $9,000 left towards medical expenses. Add in all the insurance, Medicare premiums and mileage to the doctor, and you might have enough medical expenses to generate a deduction! http://www.irs.gov/publications/p17/ch21.html
Remember, though, when your mom-sitter works in your home, you’ll have all kinds of payroll issues. http://www.irs.gov/publications/p503/ar02.html#d0e2446
If you get the care by dropping Mom or Dad at a senior day care facility, be sure to get the place’s federal ID number.
Remember, you’ll find answers to questions about dependent care and all kinds of tax issues, free. Where? Where else? At TaxMama.com[Note: If you were subscribed to the e-mailed TaxQuips, you’d get special tips that aren’t published anywhere else. Please click on the subscribe link and join us.]
- Ask TaxMama :: Where taxes are fun and answers are free
- IRS Publication 503 :: Child and Dependent Care Expenses
- IRS Publication 503 :: Dependent Care as Medical Expenses
- IRS Publication 17 :: Medical Expenses