As you fill out your 1040 online and figure in your deductions, don’t forget some often over-looked deductions for caregivers. Catey Hill from Smartmoney’s The Tax Blog explains some of the lesser mentioned deductions that you can deduct from you 1040. Online, she titles her article “A Look at Tax Breaks for Caregivers,” posts it on the December 23, 2010 tax site, and brings in the new year with some smart advice.
It’s estimated that 62 million Americans care for an adult in some form, and some statistics say that caregivers pay out of their own pockets an average of $5,531 per year. This takes a toll, and tax deductions that you could be deducting from your 1040 online should be taken advantage of when possible.
So, what can be deducted? IRS Publication 501 outlines much of the criteria listed for caretakers hoping to take advantage of potential tax breaks. If you want to claim a “qualifying relative exemption,” the adult must be qualified as a relative, live with you the whole year, have an income of less than $3,650, and not be claimed by you as a dependent child. You must also be the sole provider of over half of the adults support through the year.
Another deduction possible on your 1040 online is to deduct their medical expenses. According to IRS Form 2120, you must be the sole provider of over half their support, and the medical deductions (which may include long term care insurance premiums) must add up to more than 7.5% of your AGI.
Almost half of the states will allow deductions from state income taxes. Before filling out your 1040 online, check out if you state is one of these states. South Carolina promises that family members who need to hire a caregiver during work are allowed to actually deduct as much as 7% of that amount on their federal forms and have it deducted from their state income taxes.
There are many options open to caregivers. Make sure as you fill out the deductions on your 1040 online that you explore these options and are sure to take advantage of them.Tags: caregivers tax deductions, qualifying relative exemption