Claiming exemptions on your federal income tax return can significantly reduce your tax obligation. The Internal Revenue Service recognized two types of exemptions; personal exemptions and exemptions for dependents. If you are married and file a joint return, you can take one exemption for yourself and another for your spouse. You also get one exemption for each of your qualifying children and qualifying relatives. Depending on your income, you might qualify for the Earned Income Credit.
You can claim an exemption for your parent if she meets the IRS criteria as a qualifying relative. There is no age requirement for a qualifying relative, and your parent does not have to live with you as a member of your household. You have to provide more than half of your parent's support and her gross income must be less than $3,700 for the year.
Earned Income Credit
Claiming your parent as a dependent has no effect on determining either your eligibility for the Earned Income Credit or the amount you might receive. The only factors that matter are your filing status, your earned income and the number of your qualifying children. Your parent does not qualify because she cannot meet either the age or relationship test as a qualifying child.
Child and Dependent Care
Having a dependent parent has no effect on your ability to claim the Earned Income Credit, but you might be able to claim the Child and Dependent Care Tax Credit. This credit is available if you paid someone other than your spouse to care for your dependent parent who is mentally or physically incapable of caring for herself. Unlike the EIC, the Child and Dependent Care Tax Credit is not refundable.
Exemptions and Deductions
If you can claim your parent as a qualifying relative, you can take a dependent exemption for her. For the 2012 tax year, each exemption reduced taxable income by $3,800. You might be able to further reduce your taxable income by adding your dependent parent's unreimbursed medical expenses to the rest of your family medical expenses, if you itemize your deductions.
- IRS: EITC Home Page
- IRS: Earned Income Tax Credit Rules for Everyone
- IRS: Qualifying Child Rules
- Aging Care: 2011 Tax Tips for Family Caregivers
- South Brooklyn Legal Services: What is a Tax Credit?
- IRS: Ten Things to Know About the Child and Dependent Care Credit
- Western and Southern Life: 2012 Standard Deductions & Exemptions