Newsletter





	January 2012


	"2011 Tax Tips for Family Caregivers" By- Honkamp Krueger & Co (excerpt from www.agingcare.com) If you are supporting an elderly parent, you may qualify for some tax benefits from the U.S. government that reward you for your care giving efforts. These tax benefits may include claiming your parent as a dependant on your tax return or deducting the contributions you made towards their medical expenses and care. In order to qualify for these tax breaks, you must first be aware of the tax benefits available and then determine whether you qualify. Tip #1: Determine if you are able to claim your elderly parent as a dependent. If you support your elderly parent, you will want to claim him/her as a dependant on your tax return to receive the maximum amount of tax savings. You can then take an exemption for the 2011 tax year, which will equate to a reduction of your taxable income by $3,700. In order to determine if you qualify to claim your elderly parent as a dependent, you will need to pass the following four tests. Not a qualifying child test - Obviously, a qualifying child is another type of a dependent; however, the IRS wants to ensure a qualifying child dependent status (which has its own set of requirements) is not claimed using these four tests. This test is a non-issue for caregivers. Member of household or relationship test - If you are a son or daughter who is caring for a parent, you qualify since you meet the relationship test. You and your parent do not need to live with one another in order to qualify. In the case where a parent lives on their own or in assisted living, your parent may still qualify as a dependant as long as they pass the other tests. Gross income test - Your parent's gross income for the year must be less than $3,700. This amount does not include income from non-social security or disability payments. However, income received from other sources, such as withdrawals from retirement plans, pension benefits, rental income, or interest and dividends from investments would go towards a parent's income total, which could disqualify the parent as a dependant if he/she exceeds the income limit. Support test - The final test to complete is the support test. This test can be the most complicated to determine. In order to meet the requirements of this test, you must pay for over half of your parent's expenses. There are many factors involved in coming to this conclusion including food, housing, clothing, medical care, and transportation expenses. Tip #2: File a "Multiple Support Declaration" Another possible deduction comes into play when there are multiple siblings giving support for a parent. In this case, as long as a sibling provides at least 10 percent of the support and the combined support of all siblings makes up half of their parent's annual expenses, the parent could be claimed as a dependent. However, only one sibling can take the exemption for the parent. An agreement needs to be reached each year as to which sibling will take the exemption on their return. The sibling taking the exemption will need to file Form 2120, Multiple Support Declaration, and have all of the other siblings sign the form claiming that they will not take the exemption on their own return. Tip #3: Determine if you are eligible for a dependent-care credit. As a family caregiver, you may be eligible for the Child and Dependent Care Credit if you paid someone else to care for your elderly parent so you were allowed the opportunity to work or look for work. If eligible, you would be allowed a credit of up to 35 percent of the expenses paid for dependent care with the maximum amount of expenses being $3,000. This means the tax credit can be worth up to $1,050. To be eligible, you (and your spouse if filing jointly) must have earned income during the year, and the care recipient must be unable to physically or mentally care for him or herself. Care recipients must also be claimed as a dependent (if the recipient's income is under $3,700) on the caregiver's tax return, and you must identify all persons or organizations that provide care, according to the qualifications listed on IRS Form 2441. Tip #4: Deduct your parent's medical costs. If you were not able to claim your elderly parent as a dependant because his/her gross income was more than $3,700, there may still be a chance to receive tax savings this tax year. Medical expenses may be deducted on your tax return, along with your own expenses, for dependants and for individuals that would have been a dependant, except for the income guidelines. The IRS allows caregivers to deduct costs incurred from a parent's health care, such as hospitalization, prescription drugs, dental care and even long-term care services. A complete list of deductible medical expenses is available in IRS Publication 502: Medical and Dental Expenses. The deduction is limited to medical expenses that are in excess of 7.5 percent of the caregiver's adjusted gross income (AGI). So in the case where a caregiver makes $50,000 in 2011, the caregiver would not be able to receive any deductions until medical bills accumulating to $3,750 have been paid. "Homecare -- Can it be structured to be a tax deduction?" -- by Paula Harrington-Hill We are fast approaching "income tax" time. The holidays are over and a New Year is beginning. If you are looking after dependent children and your elderly parents or relatives, who require care with the everyday "activities of daily living" you may be able to write off long term care expenses as a deduction. You will want to check with your tax accountant for your particular circumstances. This is a busy time for baby boomers and high pressure professionals. We can use all the help we can get to reduce our expenses and the stressors in our lives. Some of us have disabled children and parents who need care. We have lots of things that take up our time and energy. Who can help us and who can we trust? Many people have faced just such a dilemma. They have decided that the best alternative was to find a company they could trust to help them with their concerns. You hire a tax accountant at tax time and a professional mover when it's time to move. Why wouldn't you hire a home healthcare agency to provide long term care in your home for a family member that needs assistance. Respite care is another alternative. If you require a needed break away from the many responsibilities that you now have that are putting a lot of stress and strain on your time and energy. This is a gift you give yourself and one that your family member will really appreciate. Parents and children know when you have reached your over-stressed level. They will probably welcome the opportunity to spend some quality time with a professional person dedicated to their care and concerns. For this year's "gift giving" occasions, you and other family members may want to pool your financial resources. Instead of buying many small gifts, which quickly loose their value - chip in together as a family and buy your parents or other loved ones the gift of a Mastercare gift certificate. What gift could be better than "care at home?" Mastercare is available to you 24 hours a day, 7 days a week. Mastercare is a locally owned and operated and has a proven long term track record of serving and satisfying families. Mastercare provides: non-medical homecare services for elders, providing comfort and companionship medical skilled nursing services to assist with rehabilitation after injury or stroke registered nurses to assist with medically challenged children, infants and the medically frail solutions that you can use right away to make things better for you and your family care plans and schedules that you have agreed upon Their friendly professional staff will do a thorough assessment of your family's needs. Mastercare employees are carefully screened, bonded and insured. All of their credentials are up-to-date. Our employees are care-givers not just care-takers, working under the supervision of a Registered Nurse. If you have any questions or concerns about your family member's care, you will receive a prompt call back from someone familiar with your particular situation. Feel free to visit us on the web at: www.gomastercare.com or call our office at (808) 597-1564. Get a Mastercare Gift Certificate for someone you love and don't forget to take advantage of our offer of Free Homecare Services - you'll be glad you did. Recipes for Health 10 Stress Busting Foods (great for tax prep time) Blueberries:They're bursting with vitamin C, which is what your body uses as fuel when your heart is racing. Crammed with tons of antioxidants (those molecules that fight free radicals that damage your cells), which repair and protect your body from the effects of stress. Almonds: Just a few almonds will keep your heart from racing when panic attacks. They help lower your blood pressure and keep oxygen flowing throughout the body. Spinach: Spinach is the magic cocktail of all greens. It provides a huge amount of magnesium. Magnesium is a mineral that helps lower your stress level by keeping you in a calm state Tuna: Tuna is naturally loaded with Omega-3 fatty acids that help keep your adrenaline from spinning out of control. Oranges: Peel your way to the magic of vitamin C locked inside a juicy orange. Stress can delete your storage of vitamin C, which is something your body doesn't produce naturally. Vitamin C helps your immune system function under stress more efficiently. Milk: Are your muscles tight and tension high? Milk's calcium can be a soothing remedy for anxiety, and help you to restore tranquility. A small glass will also give you a dose of vitamin B2 when you're feeling a little restless. Bananas: Grab a banana for instant balance when life has you spinning of control. This naturally prepackaged fruit is full of potassium, a mineral that can help reduce tension. Sweet Potatoes: Not really a potato, these roots are good source of vitamin B6, which help support a wide range of activities in your nervous system and help give you a major dose of relaxation. Brown Rice: The right carbohydrates produce the right results. This delicious, nutty-flavored grain has compounds to relieve stress and anxiety while simultaneously improving concentration. It's also great source of B complex vitamins and fiber. Avocados: This creamy gem will satisfy even your most intense fat cravings. A great nutritional enhancer that helps the body absorb other vital nutrients, avocados are filled with potassium and vitamin E, which can help when your nerves are in overdrive. Laughter Is the Best Medicine "There once was a time when you saved up for old age, now you save up for April 15th" "Worried about an IRS audit? Avoid what's called a red flag. That's something the IRS always looks for. For example, say you have some money left in your bank account after paying taxes. That's a red flag." -- Jay Leno Q: Why is a tax audit like a tornado? A: There's a lot of screaming and you end up losing your house. Where there's a will, there's an Inheritance Tax