Tax Season for Caregivers: Seven Steps to Help

Taxes can be daunting, and they can definitely add a lot of unwanted stress to our lives. Caring for an aging parent is an act of love, but it doesn’t come without challenges. And tax season can absolutely be one of those challenges. However, it doesn’t have to be all bad. With a little organization and some extra knowledge, this process can become a whole lot easier. It might even benefit you! 

Now with the knowledge that all of this can feel overwhelming, let me break it down for you. These are some crucial steps you can take in order to make all of this so much easier on both yourself, and your loved one. 

Step One: Find out if you can claim your parent as a dependent! 

• A great first step is researching to find out whether or not you are eligible to claim your parent as a dependent. This can vary based on where you live, so it is important to do your research. 
• Most of the time there will be criteria such as; how much financial support you provided throughout the year, your parent's gross income for the year, your parent’s filing status, medical expenses, and residency. 
• If you are eligible, you may have additional exemptions and credits available! 

Step Two: Understand The Logistics Of Filing!

• Don’t rush into filing without understanding all of the necessary steps you need to take. 
• If you have Power of Attorney, you can legally file taxes on your parent’s behalf. Before you do this, ensure your POA document explicitly grants you the authority to prepare and sign tax returns on your parent’s behalf. 
• If required, you can complete an IRS Form 2848 (Power of Attorney and Declaration of Representative) to officially notify the IRS of your role. 

Step Three: Track all medical expenses!

• Remember to keep detailed records of all your parent’s medical bills, prescriptions, and any other expenses specific to caregiving. 
• If your medical expenses exceed a specific percentage of your adjusted gross income they may be deductible. 
• Home healthcare and assisted living costs may also be deductible!

Step Four: Home Modifications and Equipment!

• If you have made any home modifications specifically to accommodate your parent’s needs, these costs may be deductible as medical expenses as well. 
• Keep records of all home modifications and equipment such as; ramps, railings, and stairlifts. 

Step Five: Stay Organized!

• Don’t wait until tax season arrives to start organizing all the needed paperwork!
• Stay organized throughout the year with physical folders kept in a safe place in your home, or digital documents.
• Remember to keep receipts, medical documents, and records of all caregiving-related expenses. 

Step Six: Don’t Be Afraid To Ask For Help!

• Taxes can be complicated, and admittedly a little bit confusing. It’s okay to ask for help! 
• Tax advisors can assist you if you don’t feel comfortable handling all of it yourself. It can be easy to miss out on deductions or credits if you aren’t fully comfortable filing your taxes on your own. Always do what you need to do in order to avoid errors, and (most importantly ) maximize your benefits. 

Step Seven: Take A Breath!

• You’ve got this! You have a lot on your plate, but tax season doesn’t have to be any extra weight added!

Managing all your typical daily tasks, and then adding tax season to the agenda can be daunting. But I hope these tips can help make everything a little bit easier for you!