Taxes when you pay for a parent's care: the medical deduction, the dependent care credit, and New York's credit

Read this with a tax preparer

Tax rules have thresholds, exceptions, and worksheets. This page tells you which questions to bring to a preparer, and links the IRS pages so you can read the rule yourself. It is not tax advice.

The medical expense deduction

If you itemize on Schedule A, you can deduct medical and dental expenses that exceed 7.5 percent of your adjusted gross income for the year, for yourself, your spouse, and your dependents, and only amounts not reimbursed by insurance. The IRS's Publication 502 explains what counts. Two items families miss:

• Nursing home costs, including meals and lodging, when medical care is the principal reason the person is there. If the person is there mainly for personal reasons, only the medical part counts.
• Qualified long-term care services: help with daily activities under a plan of care for someone a licensed practitioner has certified as chronically ill, meaning unable to do at least two activities of daily living for at least 90 days, or needing substantial supervision because of severe cognitive impairment. Premiums for a qualified long-term care insurance policy count too, within age-based limits.

Can you claim a parent as a dependent?

Sometimes. A parent can be a qualifying relative if you provide more than half of their support and their gross income is under the year's limit, among other tests; they do not have to live with you. If several siblings share support and none pays more than half, Form 2120 lets the family agree that one of you claims the parent, as long as that person paid over 10 percent. The IRS has an online tool, Whom may I claim as a dependent, that walks through the tests.

The Child and Dependent Care Credit

This credit is for care you pay for so that you can work or look for work. It can apply to a spouse or a dependent who is physically or mentally incapable of self-care and lived with you for more than half the year. The IRS caps the expenses counted at $3,000 for one qualifying person and $6,000 for two or more; the credit is a percentage of those expenses that depends on your income. Claim it on Form 2441. Adult day care and an aide during your working hours are the typical expenses; a parent who lives in their own home does not qualify you for this credit.

New York's long-term care insurance credit

New York offers a credit of 20 percent of premiums paid for a qualifying long-term care policy, up to $1,500 for individuals, for taxpayers with New York adjusted gross income under $250,000. Claim it on Form IT-249. The state page has the details.

Bring to the preparer

• A total of what you paid for the parent's care, medical bills, and premiums, with receipts.
• A rough total of the parent's own income and what others contributed to their support.
• Whether the parent lived with you, and for how many months.
• Any doctor's certification of chronic illness, if you paid for long-term care services.
• The long-term care insurance policy and premium statements.