08 May Deducting care costs for elderly mom

 Q. I help to take care of my mother, who is 90. She lives in my home and I care for her, and I also hire a home health aide to help sometimes. She only gets Social Security, so I pay for most of what she needs. Can I claim her as a dependent, and what costs can I deduct from my taxes?

A. Your mom is very lucky to have you.

In order to claim your mother as a dependent, you must meet the requirements set by the Internal Revenue Service (IRS), said Amanda Lott, a certified financial planner with RegentAtlantic Capital in Morristown.

There are two requirements: the income test and the support test.

To meet the income test, your mother must not have earned or received more than the exemption amount for the current tax year, which is $4,000 in 2015, Lott said.

“Generally, Social Security benefits do not count, but there are exceptions, particularly if your mom had other income from interest or dividends,” she said.

For the support test, you must have provided more than half of your mother’s support during the year.

“This can include the fair market value of the room your mom occupies in your home (i.e. a monthly rent equivalent), the food you provide her, utilities paid for, medical bills and other living expenses that you pay,” Lott said. “You then compare the total amount of expenses to the total amount of income, including Social Security, that your mother has and used to pay for her own expenses, to determine if the more than 50 percent test is met.”

Lott said you need to remember that if you claim your mother as a dependent on your tax return, she cannot claim herself as a dependent on her own tax return.

For medical expenses that you paid for your mother, you can include those as an itemized deduction on your Schedule A, Lott said.

“In order for the deduction to be beneficial to you, the total amount of all medical deductions — for you and your mother in aggregate — must exceed 10 percent of your adjusted gross income,” Lott said.

If you cannot deduct your mother as a dependent because she fails the income requirement, the IRS still allows you to deduct the medical expenses you paid for her, if you meet the support test.

Lott said you may also be eligible for the dependent care credit. That would be if you have earned income and if the care provided by the home health aide was done while you were working or looking for work.

Be sure to consult with your tax advisor to confirm how these deductions apply in your specific situation.

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This story was first posted in May 2015.