Tax Refund

Mother’s Day and Father’s Day have come and gone, and this week, we get the granddaddy of them all: it’s National Grandparents Day! That’s worth celebrating – after all, where would any of us be without them?

Making it through the golden years requires more gold than it used to, and if you are helping your grandparents get by financially, you may wonder if you can deduct them on your tax return as dependents. Well, I know you’re tired of hearing me say this, but – it depends. In general, if you are paying the majority of your grandparents’ bills because their resources are limited, it is likely that you can claim them as your dependent.

Here is what is required for a grandparent (or any other relative) to be your dependent.

  1. They must be a U.S. citizen, U.S. National, or a resident of the U.S., Canada or Mexico.
  2. You must provide more than half of their support.
  3. Their income must not exceed $ 4,700 for 2023).
  4. They must not file a joint tax return with a spouse.
  5. They must not be the dependent of someone else.

Notably missing from that list of “musts” is “living with you.” There’s no requirement that your grandparents live with you to be claimed as your dependent as long as you meet the other five qualifications. But if you are supporting someone that you think of as a grandparent but isn’t actually related to you, then they must be a member of your household for the entire year.

If your grandparent is your dependent, you may claim a deduction for the medical expenses you pay on their behalf. Those expenses are included with the medical expenses for you and the rest of your family, which in aggregate must exceed 7.5% of your adjusted gross income to be deductible.

Dependent Care Expenses

If you pay for a caregiver or for senior daycare for an aging grandparent while you work or look for work, you can take a tax credit for some of those expenses in the same way that you can take a credit for Child and Dependent Care for child care you pay for your children while you are at work.

If your situation is the opposite of this, that is, your grandparent cares for your children while you work, then any money that you pay your grandparent may qualify for the Child and Dependent Care credit, as long as you indicate their social security number on your tax return. But be careful; this is a double-edged sword: while the costs you pay your grandparents would be considered a qualified childcare expense for you to claim the Child and Dependent Care credit on your taxes – it doesn’t allow you to pay a dependent. This means you would not be able to claim your grandparents as a dependent and use the cost you paid them for child care toward the Child and Dependent Care credit. If you are able to claim your grandparent as a dependent, you could also be eligible for the “Other Dependent Credit” worth $500 on your tax return. This credit phases out for incomes over $200,000 (or $400,000 for those married filing a joint tax return).  

Don’t worry about knowing these tax rules.  TurboTax will ask you simple questions about you and give you the tax deductions and credits you’re eligible for. Meet with a TurboTax Full Service expert who can prepare, sign, and file your taxes, so you can be 100% confident your taxes are done right. Start TurboTax Live Full Service today, in English or Spanish, and get your taxes done and off your mind.

  • Previous Post

    Can the Cost of Fertility Treatments be Deducted from Your…

Ginita Wall
Ginita Wall

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *