02 May I’m a caregiver. Can I take a tax deduction?
Q. I have been a caregiver for my sister for the past two years. I do all the housecleaning, all personal shopping and prepare six suppers for her each week. I assume the cost of all groceries. I can’t put a cost on the cleaning and shopping time. Can I claim the cost of the dinners on my taxes? Say it’s $5 per dinner or $1,500 a year. Can I do this?
A. You’re kind to care for your sister.
You cannot deduct the cost of meals, but there may be other tax remedies for you.
You can claim a $500 nonrefundable credit if your sister is your dependent, said Jody D’Agostini, a certified financial planner with AXA Advisors/The Falcon Financial Group in Morristown.
A tax credit is deducted from the taxes that you owe, rather than lowering your taxable income.
“There are many parameters, but she must be a U.S. citizen with gross income less than $4,150 in 2018,” D’Agostini said. “You must have paid more than 50 percent of her living expenses or she must be living with you.”
Your sister also can’t be claimed as a dependent by anyone else.
We’re not sure based on your description that your relationship qualifies, but if it does, be shure to keep careful records of all her expenses and save all receipts.
D’Agostini said there could be an additional tax break for you.
“By adding her as a dependent, you could qualify as `head of household’ when you file your taxes,” she said. “This should lower your tax burden as the tax tables are more advantageous.”
For example, she said, if you do not itemize but rather claim the standard deduction this could mean an $18,000 a year versus a $12,000 a year deduction as a single filer.
You should consult your tax professional for advice.
If you go this route, note that the arrangement could impact your household health insurance costs if you obtain your insurance through the marketplace or if your sister is eligible for Medicaid, D’Agostini said.
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This story was originally published on May 2, 2019.
NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.