The standard advice about tax preparation — start early, do your homework, get professional help if you can afford it — goes double for caregivers, who tend to have minimal time and no shortage of other financial issues to sort out.

Many caregivers lose out on potential savings because they aren’t aware of the tax rules that affect them. Here are five essential tips to get started

• Claiming a dependent, if possible. If you provide more than half of the care for a family member with very little income, you may be able to claim that person as a dependent. Read more about making such a claim.

• Learn about the dependent care credit. If you pay for care while you work, whether the care received at home or at a facility such as an adult day care center, you might qualify for a dependent care credit. See IRS Publication 503, Child and Dependent Care Expenses, for more information.

• Deduct caregiving costs. Costs associated with helping someone perform routine daily activities such as dressing, eating, and using the toilet may be deductible as medical expenses if they add up to more than 7.5 percent of your adjusted gross income. For details, see IRS Publication 502, Medical and Dental Expenses.

• Home modifications add up. Have you installed a wheelchair ramp or otherwise adapted your home to accommodate a loved one? The costs you’ve incurred may also be deductible as medical expenses. (Here’s a handy checklist for home mods, by the way.)
• Learn about state-specific benefits. About half of all states offer a tax credit or deduction specifically for caregivers. Provisions change every year; contact your state’s tax commission for details.

Filed under: Caregiving, Working Caregivers