My mother, who is in the early stages of dementia, has moved in with me. She will attend an adult day care program while I’m at work. Can I deduct any of the expense of her care?
You may be able to claim a dependent-care tax credit or set aside pretax dollars in a flexible spending account to pay for her care, as long as the expenses are necessary so that you (and your spouse, if you’re married) can continue to work.
To qualify for the tax credit, your mother must be physically or mentally unable to care for herself. The rules for claiming the dependent-care tax credit are less stringent than those for claiming a parent as a dependent. That means even if your mother’s gross income exceeds $3,700 (the personal-exemption amount for 2011), you could still claim the dependent-care credit as long as you provide more than half of her support.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
For most taxpayers, the dependent-care credit is worth 20% of the cost of care, up to $3,000 for one dependent ($6,000 for two or more). But your mother must live with you more than half of the year to qualify for the tax credit. So if she moved in after June, you won’t be able to claim the dependent-care credit on your 2011 income tax return that you’ll file next year; you’ll have to wait to claim the credit on your 2012 return. For more information about the tax rules, see IRS Publication 503, Child and Dependent Care Expenses.
Or, if your employer offers a flexible spending account program, ask whether you can make a midyear election to designate up to $5,000 to a dependent-care account for this year. If not, you can set up an FSA for 2012 during this year’s open-enrollment season.
The rules for dependent-care FSAs can vary by employer, but generally your mother would be eligible if she is physically or mentally incapable of caring for herself, she lives with you for more than half the year, and you provide more than half of her support. “A practical example of an eligible expense might be the fees for a senior day care center for elders with Alzheimer’s -- if, say, a parent lives with and is dependent on an adult child who works, and the parent goes to a senior center each day because the parent can’t be left alone,” says Jody Dietel, of WageWorks, which administers FSA plans for many large employers.
You must choose between the FSA and the tax credit; you cannot claim both for the same expense. For tips on which is the best choice for you, see Tax-Friendly Ways to Pay for After-School Care. The calculations are the same whether you are paying for child care or elder care.
-
Dow Adds 646 Points, Hits New Highs: Stock Market TodayIt was "boom" for the Dow but "bust" for the Nasdaq following a December Fed meeting that was less hawkish than expected.
-
5 Types of Gifts the IRS Won’t Tax: Even If They’re BigGift Tax Several categories of gifts don’t count toward annual gift tax limits. Here's what you need to know.
-
The 'Scrooge' Strategy: How to Turn Your Old Junk Into a Tax DeductionTax Deductions We break down the IRS rules for non-cash charitable contributions. Plus, here's a handy checklist before you donate to charity this year.
-
5 Types of Gifts the IRS Won’t Tax: Even If They’re Big
Gift Tax Several categories of gifts don’t count toward annual gift tax limits. Here's what you need to know.
-
The 'Scrooge' Strategy: How to Turn Your Old Junk Into a Tax Deduction
Tax Deductions We break down the IRS rules for non-cash charitable contributions. Plus, here's a handy checklist before you donate to charity this year.
-
Tax Refund Alert: House GOP Predicts 'Average' $1,000 Payouts in 2026Tax Refunds Here's how the IRS tax refund outlook for 2026 is changing and what steps you can take now to prepare.
-
New IRS Changes to FSA Contribution Limits for 2026: What to KnowHealth Care Flexible Spending Accounts have tax advantages worth looking into, especially in light of new IRS changes.
-
Is a New $25,000 Health Care Tax Deduction Coming in 2026?Tax Policy A proposal from GOP Sen. Josh Hawley adds to the chatter about health care affordability.
-
3 Ways High-Income Earners Can Maximize Their Charitable Donations in 2025Tax Deductions New charitable giving tax rules will soon lower your deduction for donations to charity — here’s what you should do now.
-
An HSA Sounds Great for Taxes: Here’s Why It Might Not Be Right for YouHealth Savings Even with the promise of ‘triple tax benefits,’ a health savings account might not be the best health plan option for everyone.
-
10 Retirement Tax Plan Moves to Make Before December 31Retirement Taxes Proactively reviewing your health coverage, RMDs and IRAs can lower retirement taxes in 2025 and 2026. Here’s how.
