This Thanksgiving week, many of us are seeing family for the first time in months, if not years. (Thanks, no thanks, COVID-19.)
If your family members include aging parents, in addition to lots of long hugs and catching up and crying, you probably should spend some time making sure they're doing OK when you're not around.
If you do find Mom and Dad could use a little, or even a lot of assistance, there's a chance the dependent and child care tax could help you provide it.
But before we take that tax step, we first need to gauge how our older relatives, especially if they're our parents, are doing. That can be tricky.
Checking out the parents: I know how it is to have a proudly independent octogenarian relative. These folks took care of us and they don't want us to take care of them now, even if deep down they know they need and want the help.
How you approach this obviously depends on your personal family dynamics. But regardless of your conversational and investigative techniques, you need to be on the lookout for some basic indications that your loved one could need some extra attention and outside help.
Be aware of, for example, such things as whether:
- Mom, Dad, the grands, or everyone's favorite Aunt Barb are having trouble focusing on things, both visually and in conversations;
- They're neglecting personal hygiene; and/or
- They don't seem interested in eating the Thanksgiving spread or any other meals.
My post from previous Thanksgiving weeks on taking time at Thanksgiving to check on aging parents elaborates on these and other behaviors that could be clues that our folks might need some help. And it's always better to discover this sad fact of aging before the situation gets extreme.
Tax help for helping out older parents: If you do discover that you now need to take a more active role in caring for your parents, remember that you might be able to get some help from Uncle Sam.
If you determine that your mom or dad (or both) need to move in with you so you can provide more direct and daily care, you are a saint. The Internal Revenue Service has no canonization authority, but it can offer some tax help.
As noted in yesterday's post, you might be able to claim the tax credit for other dependents. It can be tricky, especially the support requirement where your folks are getting Social Security benefits and have other earnings. But it's definitely worth examining. As I say repeatedly here on the ol' blog, check with a financial and tax advisor.
Dependent care credit: You also might want to look into the child and dependent care tax credit. This tax break often is used by working parents who pay for care of their kiddos.
But as the full, official name of the tax credit indicates, it applies to caregiving costs for any qualifying taxpayer dependent. The credit is calculated based on your income and a percentage of expenses that you incur for the care of qualifying persons so that you can go to work, look for work, or attend school.
For 2021, the American Rescue Plan Act enacted back in March made the credit, which offers a dollar-for-dollar offset of any tax you owe, substantially more generous. For this tax year, it could provide up to $4,000 for one qualifying person and $8,000 for two or more qualifying persons.
It's also potentially refundable, so you might not have to owe taxes to claim the credit as long as you meet the other requirements.
Note, though, that there is an income limit on claiming the child and dependent care tax credit. If you're adjusted gross income is more than $438,000, you're not eligible for this tax help.
A special IRS frequently asked questions web page has more on claiming the child and dependent care credit, as well as what's included as qualifying expenses. Note that FAQs #6-14 focus on the credit's changes that apply only to this tax year.
If you want even more information, you also can check out IRS Publication 503, Child and Dependent Care Expenses.
I hope that you've read this post merely as part of your advance planning and that you'll discover this Thanksgiving week that things are great with your older family members. Now and for many, many holidays and regular days to come.
This is the third of this Thanksgiving week's National Family Week posts
that focus on family-related tax provisions.
You also might find these items of interest:
- Are your aging parents in financial trouble?
- More potentially taxable Social Security benefits in 2022
- We can't stop Father Time, but we can prepare physically, emotionally and financially