When preparing taxes while caring for an elderly loved one, it is important to understand potential deductions and credits you may be eligible for, organize relevant documentation, and be aware of the specific tax implications related to caregiving. Here’s a guide to help you navigate tax season.
Determine Dependent Status
Navigating the tax implications of caring for an elderly loved one involves several crucial steps to ensure compliance and maximize potential benefits. Firstly, it’s essential to determine the dependent status of your loved one. This entails considering tests such as the Qualifying Relative Test, which examines specific criteria like income thresholds and support levels. Additionally, the Support Test mandates that you provide more than half of your loved one’s total support for the year for them to be considered a dependent.
