Learn more about CFSS in Minnesota
Family caregivers often have expenses and responsibilities that can complicate their tax filing process. But the good news is that there might be a family caregiver tax exemption or even a caregiver tax credit that you might be eligible for!
At Best Care, we do not provide professional tax services, so this information is just for your reference. You should always consult a qualified professional when looking for answers to your questions about how to qualify for the caregiver tax credit or exemption.
This article provides an overview of some of the tax considerations you should keep in mind and provides direct links to IRS resources that will be helpful.
There are certain tax benefits for caregivers, which can vary depending on your relationship with the care recipient.
For example, if you provide care for a person who qualifies as your tax dependent (this could be your minor child or aging parent, for example), you may be eligible for the Credit for Other Dependents, worth up to $500 per dependent. Medical expenses you pay for a dependent could also potentially be deducted once they surpass 7.5% of your adjusted gross income.
Additionally, the Child and Dependent Care Credit also provides financial relief for caregiving expenses incurred while working. That means if you need to hire someone to provide care for your dependent loved one, so that you can look for outside work or work at an outside job, you could potentially claim a $3,000 to $6,000 tax credit.
You may be able to deduct caregiver expenses from your taxes under certain conditions. As mentioned above, if you pay for medical expenses for a dependent, you can potentially itemize and deduct these expenses once they exceed 7.5% of your adjusted gross income.
Other deductible expenses might include costs for in-home care services, medical equipment, or transportation for medical appointments. To qualify for deductions, your expenses must be related to the care of a person who qualifies as your tax dependent.
However, if an insurance provider or other service reimburses you for specific caregiver expenses, you cannot deduct those same expenses from taxes. Additionally, you cannot deduct expenses for non-medical services, such as housekeeping or cooking, even if you perform these responsibilities in support of the care of a dependent.
As a family caregiver, your income is taxable in most circumstances. You would need to report it on your tax return. If you are a W-2 employee, you are already paying payroll taxes. Self-employed caregivers would most likely be responsible for self-employment taxes.
However, according to the IRS, if you provide care for a loved one in your home and that relative gives you some money to help with household expenses, that gift is probably not taxable.
You could also qualify for a live-in caregiver tax exemption. Your caregiver income would be exempt from federal and state taxes if:
Learn more about this exemption on the IRS website.
A great resource as you research your tax implications as a family caregiver is the IRS website. This link takes you to a helpful list of frequently asked questions for family caregivers as they prepare to file their taxes.
In addition, if you are not a W-2 caregiver and are instead self-employed, there are additional considerations as you file your taxes. Please reference this IRS article for questions regarding self-employment and family caregiving.
We at Best Care are here to support you with information and resources related to your role as a family caregiver. Thank you for all the hard work that you undertake, each and every day!
