Late March is best known for many as the time of year that they fervently fill out their “March Madness” college basketball bracket in hopes of winning the office pool or family competition. For others, however, this marks the time when the procrastination ends and you finally get around to filing your taxes. With less than a month left before the classic April 15th deadline, if you have not done so already, it is time to start gathering paperwork and getting the task out of the way.
Elder Care & Taxes
Tax issues are notoriously complex and confusing. And considering the thousands of pages that make up the Tax Code, New York residents can be forgiven for not committing the details to memory or spending their free-time analyzing the issues. Yet, one general tip that most are aware of is the need to claim all possible deductions in order to lower your overall tax burden.In that regard it is important not to forget the way that elder care intersects with your taxes.
Consider a common scenario in many local households–an elder parent lives with and receives some basic support from their adult children. In those situations, the IRS may allow the caregiving-children to claim the parent as a “dependent” for tax purposes–similar to the way that children are categorized.
According to IRS rules, elder parents can be claimed as depending so long as they meet certain criteria, including:
***The parent is not filing jointly with another (i.e. married spouse)
***The children provide at least 50% of their parent’s support for the previous year. This may include housing costs, medical care, food, transportation, and similar costs.
***The parent’s taxable income must be less than the IRS personal exemption level (a few thousand dollars). Most Social Security payments would not count toward this figure, and so it only refers to extra money that they are earning (i.e. a part-time job)
But it is important to think carefully about the overall effect of this step. That is to ensure that claiming one as a dependent does not affect the senior’s Social Security or Medicaid eligibility. If done properly, claiming a parent as a dependent should not impact use of those federal programs. However, the details can be quite complex, and so it is best to have the counsel of experienced elder law attorneys before make any specific decisions.
For help with many different elder law issues in New York–from applying for Medicaid to securing long-term care insurance–be sure to contact an experienced attorney today.