Are you supporting an elderly parent? If so, don't overlook several tax breaks that might help you offset some of your expenses.
Claim a dependent exemption. You might be able to claim your parent as a dependent if you provide more than half of your parent's annual support and meet several other tests. It's worth doing some planning to meet the requirements because an exemption deduction is worth $3,000 for 2002 and $3,050 for 2003.
Sometimes several siblings join together to care for a parent. If you jointly meet the dependency requirements, you can designate one sibling to receive the exemption. Some families alternate who gets to use the exemption each year. Others give it to the sibling who can use it to generate the most tax savings.
Deduct medical expenses.
If you itemize deductions, add the medical expenses you pay on behalf of your dependent parent to your own medical expenses. You can deduct the combined amount to the extent the total exceeds 7.5% of your adjusted gross income.
Take a tax credit.
If you pay a caregiver to take care of your parent so you can work, you might qualify for the dependent care credit. For 2002, this credit ranges from 20% to 30% of up to $2,400 in expenses. In 2003, the maximum credit amount increases to 35% of up to $3,000 in expenses.
Choose the best filing status.
Finally, if you're single and caring for a parent, you might qualify to reduce your taxes by filing as head of household. Check with us for details.
Below are some links to
important tax tips:
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