If you helped support your parents or other adult relatives in 2015, tax breaks are available that could lower your taxes. You may be able to claim your relative as a dependent, deduct extra medical expenses, or use a more beneficial tax bracket.
- Claiming a relative as a dependent. An adult dependent’s gross income must be less than the exemption amount for 2015 ($4,000). Some income, such as social security, isn’t counted for this purpose. In addition, you must contribute more than half of your relative’s support. Social security does count as support for this test. An exception to keep in mind: When you and others together provide more than half of a person’s support, you can claim the exemption if the others are willing to sign a document called a “multiple support agreement.”
- Medical expenses. If a relative could be your dependent except for having too much income, you still might be able to deduct any medical expenses you paid in 2015. You must pay the bills directly as part of your relative’s support, and your total unreimbursed medical expenses must exceed 10% of your adjusted gross income.
- Head of household filing status. If you’re single and helping support a parent, you may be able to file as head of household. That filing status can be beneficial, because you can use the head of household tax rates. The brackets for those rates are wider than the brackets for single filers, meaning your overall tax may be lower than if you filed as single. To qualify, you must maintain your parent’s principal home, and your parent must be your dependent. Your parent need not live with you. Adult dependents other than parents generally have to live with you for head of household status to be available.
Contact us for details or to find out what tax rules apply in your situation.