Caregiver Lifestyle: Double-Duty Tax Season

Here's a safe generalization: only people anticipating a refund look forward to filing their income tax returns. For many of the rest of us, tax season frequently entails a tedious afternoon with calculator in hand, squinting at piles of receipts and 1099s and puzzling over tax regulations. If that weren't enough, many caregivers have the extra responsibility of helping their loved one file their return.

If you have to double the time and trouble you take meeting Uncle Sam's demands, you might as well make sure that you are doing it doubly right. Here are some tips to ensure that neither you nor your loved one pays more tax than you are obliged to by law:*

For Seniors

  • Take advantage of a higher standard deduction. If your loved one does not itemize their deductions, they can get a higher standard deduction if they are 65 years old or older. For 2007, this deduction will be $6,400 rather than the normal standard deduction of $5,350.
  • Calculate the taxable amount of their Social Security carefully. Use the Social Security benefits worksheet found in the instructions for IRS Form 1040 and Form 1040A, and then double-check it before you fill out their tax return.
  • File for credit for the elderly or disabled. If your loved one is over age 65, their income is less than $17,500, and the nontaxable part of their Social Security or other nontaxable pensions, annuities, or disability income is less than $5,000, they are eligible for this credit. To receive it, they must file using Form 1040 or Form 1040A, not Form 1040EZ.
  • Deduct all legitimate medical expenses. This includes such often-overlooked items as Medicare Part B and Medigap insurance premiums, a portion of long-term care insurance premiums, and transportation to and from physicians' offices.

For Caregivers

  • Claim your loved one as a dependent. If your loved one's income for 2007 (not including Social Security benefits) is less than $3,400, you can claim your loved one as a dependent if you provide more than half of their support—and take an exemption accordingly. This exemption applies even if your loved one is in an assisted living facility or nursing home. If your siblings contribute to your loved one's care, you must file a multiple support agreement (IRS Form 2120). This allows a family to designate which caregiver will claim your loved one as a dependent.
  • Deduct your loved one's medical expenses. If your loved one qualifies as a dependent, you should consider itemizing their medical expenses if your total medical expenses exceed 7.5 percent of your income. These expenses can include modifications you made to your home, such as adding a wheelchair ramp or replacing low-seating toilets.

Web Resource

Before completing your loved one's return, check the Annual Edition of Older Americans' TaxGuide, IRS Publication.

* This article should not be treated as tax advice. All residents, potential residents, and family members should consult their own tax adviser for more information.