Are You Missing Out on Tax Deductions?
The answer could be yes. For you to take the dependent tax deduction up to $3,900 on your tax return under the adult-dependent exemption, the parent must have less gross income for the tax year than the exemption amount. Generally, Social Security is excluded, but payments from dividends, interest, and retirement plans are included.
You must have contributed more than 50% of your parent’s financial support, and if the parent lived with you, the amount of support you claim under the 50% test can include the fair market rental value of part of your home.
If you shared caregiving duties with a sibling and your combined support exceeded 50%, the tax deduction can be claimed even though no one individually provided more than 50%. However, only one of you can claim the tax deduction.
The adult-dependent exemption is just one tax deducation that you may be able to employ to ease the financial burden of caring for an elderly parent. Conact our tax professionals or Jim Komos at 216.831.7171 or jkomos@cp-advisors.com for more information on qualifying for this break or others.
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