Caring for a loved one could make you eligible for deductions and tax credits. You may not have expected it to take quite so much of your money. The average family caregiver spends about $7,000 a year on household, medical and other costs related to caring for a loved one.
Fortunately, there is some light at the end of the tax year: federal tax credits and deductions that apply directly or indirectly to caregiving costs. Here are some ways family caregivers potentially can reduce their tax burden.
Taxpayers have long been able to claim a tax credit for children up to age 16. Unlike a deduction, which lowers your taxable income, a tax credit directly reduces your tax bill.
The 2017 federal tax law expanded the Child Tax Credit (CTC) to allow taxpayers to claim up to $500 as a nonrefundable “Credit for Other Dependents,” including elderly parents. Under this provision, in effect through the 2025 tax year, the Internal Revenue Service allows family caregivers to claim some individuals related by adoption, blood or marriage — and even some friends — as “other dependents” on their federal tax return as long as both parties meet these IRS requirements: Continue with article