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Frequently Asked Tax Questions

IRS Procedures - For Caregivers

  1. I am a caregiver for my aging parent, who lives in my home. May I claim my parent as a dependent on my tax return?
  2. I am a caregiver for my aging parent, who lives in my home. May I file as head of household?
  3. I care for my parents in my home. My parents occasionally give me money to pay for their share of household expenses. Is this money taxable to me?
  4. I pay for some of my parent’s medical expenses. May I deduct these expenses on my return?
  5. My parent is suffering from dementia. As a result, I must cash his/her monthly social security check and use the proceeds for his/her care. What are the resulting tax consequences?
  6. My parent transferred to me the title of his/her home. Do I need to report this transaction to the IRS?
  7. I received a death benefit from my parent’s life insurance policy. Are these insurance proceeds taxable to me?

Rev. date: 12/13/2013

I am a caregiver for my aging parent, who lives in my home. May I claim my parent as a dependent on my tax return?

You may claim your parent as a dependent if the following tests are met:
  1. You are not a dependent of another taxpayer.
  2. Your parent does not file a joint return.
  3. Your parent is a U.S. citizen, U.S. national, U.S. resident alien, or a resident of Canada or Mexico.
  4. You paid more than half of your parent's support for the calendar year.
  5. Your parent's gross income for the calendar year was less than the exemption amount.
See Table 3-1 in Chapter 3 of Publication 17, Your Federal Income Tax for Individuals, "Overview of the Rules for Claiming an Exemption for a Dependent," for additional information about claiming a dependent.  See also Publication 501, Exemptions, Standard Deduction, and Filing Information.

Rev. date: 12/13/2013

I am a caregiver for my aging parent, who lives in my home. May I file as head of household?

You may file as head of household only if you meet the following requirements:
  1. You are unmarried or "considered unmarried" on the last day of the year.
  2. You may claim a dependency exemption for your parent.
  3. You paid more than half the cost of keeping up a home for your parent for the tax year. Your dependent parent does not have to live with you.  See "Special rule for parent" in Chapter 2 of Publication 17, Your Federal Income Tax for Individuals under "Qualifying Person." 
See Table 3-1 in Chapter 3 of Publication 17, "Overview of the Rules for Claiming an Exemption for a Dependent," for additional requirements.  See Table 2-1 in Chapter 2 of Publication 17, "Who Is a Qualifying Person Qualifying You to File as Head of Household?."  See also Publication 501, Exemptions, Standard Deduction, and Filing Information.

Rev. date: 12/13/2013

I care for my parents in my home. My parents occasionally give me money to pay for their share of household expenses. Is this money taxable to me?

An amount of money that your parents give you to offset their expenses is not taxable to you.  This amount is treated as support provided by your parents in determining whether your parents are your dependents.
See Publication 501, Exemptions, Standard Deduction, and Filing Information.

Rev. date: 12/13/2013

I pay for some of my parent’s medical expenses. May I deduct these expenses on my return?

If you can claim your parent as a dependent, you also may be able to claim a deduction for the portion of your parent’s medical or dental expenses that you paid. For tax years beginning after December 31, 2012, your total deduction for medical and dental expenses must be reduced by 10 percent of your adjusted gross income. There is a temporary exemption from January 1, 2013, to December 31, 2016, for individuals age 65 and older and their spouses who must reduce their medical and dental expenses by 7.5 percent.  See "Medical and Dental Expenses" in Chapter 21 of Publication 17, Your Federal Income Tax for Individuals, for additional information. See also Publication 501, Exemptions, Standard Deduction, and Filing Information; Publication 502, Medical and Dental Expenses (Including the Health Coverage Tax Credit).

Rev. date: 12/13/2013

My parent is suffering from dementia. As a result, I must cash his/her monthly social security check and use the proceeds for his/her care. What are the resulting tax consequences?

Your parent’s social security benefits are not taxable to you.  In determining whether your parent is your dependent, you should consider the benefits used for your parent’s support as support provided by your parent.   
See Publication 501, Exemptions, Standard Deduction, and Filing Information, for additional information.
 

Rev. date: 12/13/2013

My parent transferred to me the title of his/her home. Do I need to report this transaction to the IRS?

Yes. If certain conditions apply, this transaction would be considered a taxable gift from your parent to you.
Generally, your parent must file a gift tax return (Form 709 (PDF)) if any of the following apply:
Note:  If any of the above conditions apply, your parent is required to file a Form 709, even if a gift tax is not payable.  See the Instructions for Form 709 (PDF), United States Gift (and Generation-Skipping Transfer) Tax Return, and Publication 559, Survivors, Executors, and Administrators, for additional information on gifts.

Rev. date: 12/13/2013

I received a death benefit from my parent’s life insurance policy. Are these insurance proceeds taxable to me?

Life insurance proceeds paid to you because of the death of the insured person are not taxable unless the policy was turned over to you for a price. This is true even if the proceeds were paid under an accident or health insurance policy or an endowment contract. However, interest income received as a result of life insurance proceeds may be taxable.
See Publication 525, Taxable and Nontaxable Income, for additional information.