Q: My mother lives in a assisted living facility, where she gets 24/7 care. My brother, my sister and I each pay about $1,800 a month towards her upkeep. Are we entitled to any tax deduction? JJ via email
If your mother's 2011 income (not including her Social Security benefit) is under $3,700, another taxpayer who pays more than half of her total living expenses can claim her as a dependent and take an itemized deduction for her medical expenses.
You’re splitting those expenses among the three of you; so no one is paying more than 50% of her support. But each of you is paying more than 10%. If you file a Multiple Support Declaration with the Internal Revenue Service, you can take turns claiming her as a dependent.
A couple of caveats:
You’ll have to ask the assisted living facility how much of your mother’s monthly bill qualifies as a medical expense. (The entire cost is only deductible if her doctor certifies that she must live there because she can't perform “activities of daily living” – like washing or getting dressed – without help.)
And bear in mind that medical expenses are deductible only to the extent that they are a) unreimbursed; and b) exceed 7.5% of your income.
For example, let’s say it’s Joe’s turn to claim Mom as a dependent this year, and he writes a $5,400 monthly check to the nursing home. If his two sisters reimburse him for their respective $1,800 shares, Joe can only claim a medical deduction for his own $1,800 share. And he can’t actually take the deduction unless his total unreimbursed medical expenses exceed 7.5% of his income.
For more information about potential tax breaks for adult children who are giving financial help to their parents, see my Reuters article, 'Caring for Mom and Dad Can Activate Tax Breaks'.
Please send your questions to Lynn@LynnBrennersFamilyFinance.com. I'm sorry I can't respond personally to every email. Questions are only addressed online.
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