It is estimated that there are more than 40 million Americans who are providing some level of caregiving services for an elderly relative. Taking on this responsibility often means that caregivers are impacted financially; here are several ways that caregivers for the elderly may be compensated:
Federal cash benefits – many states offer a Medicaid waiver that allows direct federal payments to family caregivers, if the care recipient’s income is low enough to qualify.
Private pay – if you are caring for a parent who has financial resources, you can be paid directly – but you should have a caregiver agreement in place that specifies how you are being compensated for services, and that such payment is not a gift. You will need to pay taxes on your earnings as income, and your parent must report the payment on their income taxes as well.
Long-term care insurance – some long-term care insurance policies offer a cash benefit allowing the policyholder to pay a certain amount for in-home care.
Dependent tax exemption – if you provide more than 50 percent of a parent’s basic living expenses, you may be able to claim them as a dependent on your tax return. They do not need to live with you to qualify. The exemption for 2016 is $4,050 – but your parent’s earnings (excluding Social Security) cannot exceed that deduction amount.
Medical expense deductions – if you use your car to drive a parent to medical appointments, have purchased a wheelchair or medical equipment, or have any other out-of-pocket medical expenses for a parent, you can claim these as deductions on your return.
The Estate, Trust & Elder Law Firm, P.L., provides attorney services ranging from estate planning for young families to advanced and crisis long-term care for seniors. Contact us for your initial consultation at one of our conveniently located offices in Fort Pierce, Stuart, Port St. Lucie, Vero Beach, and Okeechobee.