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Federal and State Tax Breaks for Family Caregivers

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Caregiving is expensive. Almost 80% of caretakers have out-of-pocket expenses, and they spend an average of $7,242 per year to cover them. Fortunately, there are federal and state tax breaks that can help family caregivers cover the cost of care. 

  1. File a loved one as a dependent 

    You can list a “qualifying relative” as a dependent on your tax return, if: 

    • They earn less than $4,300 for the year
    • You (their caregiver) provide more than half of support (rent, food, transportation, etc.) 
    • They live with you full-time or pass a relationship test

  2. Write off your loved one’s Medical Expenses / Care

    If you care for an aging loved one, you can write off: 

    • A dependent’s unreimbursed medical expenses that exceed 7.5% of your adjusted gross income
    • Up to 50% of $8,000 in care expenses  for a dependent, such as adult day care
    • A $500 dependent credit, if you fall below the $200,000 income threshold

  3. Ask your work about Dependent Care Benefits

    Workplaces may have Dependent Care Flexible Spending Account (FSA) benefits, which reduces an employee’s gross income by designating up to $10,500 for care expenses. 

    • The money is pre-tax, so it helps you save on income taxes 

  4. See if you qualify for a Stimulus payment 

    You may qualify for a stimulus payment, even if you didn’t claim your loved one as a  dependent in 2020. 

    • You may qualify for a $1400 stimulus payment if your loved one moved in with you and/or became your dependent in 2021
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