Paying for your parents' medical insurance doesn't mean that you can claim them as dependents when you file your federal income tax. Both you and your parents must meet all the requirements set forth by the IRS for you to claim them as dependents. If you do claim them, you are allowed to write off a wide variety of eligible medical expenses by itemizing deductions.
You can claim your parents as dependents on your federal income tax return as long as you provide more than half of their financial support. When calculating the amount of support you provide, include the costs of basic essentials, such as food, clothing, housing, medical care and transportation. They don’t have to live with you to meet the IRS requirements for dependents. The costs you contribute toward their medical care in an assisted living or long-term-care facility can qualify them as dependents as long as they meet the IRS income and support tests.
To pass the income requirement for dependents, a parent’s gross income must be less than the amount of the personal exemption for the tax year. You cannot claim a parent as a dependent whose gross taxable income for the year exceeds that amount. In 2011, the personal exemption was $3,700. Each qualifying relative you claim as a dependent must pass the gross income test. While Social Security retirement benefits are usually not taxed, you must include other income your parents receive that is taxable when calculating their gross income, including pensions, interest and investment income, such as dividends.
Meeting Dependency Tests
Before you can claim your parents as dependents, you must meet certain requirements other than the support and gross income tests. You or your spouse, if you are filing a joint return, cannot be claimed as a dependent on another person’s tax return. If you are, then you cannot claim anyone else as a dependent, even if the person qualifies. To claim your parents as dependents, they must be residents of the U.S., Canada or Mexico. If you claim your parents as dependents, they are not allowed to file a joint tax return of their own.
Itemizing Medical Expenses
If you can claim your parents as dependents and you itemize deductions, you can include any medical expenses you pay for your parents when itemizing. According to IRS rules, if you itemize deductions on Form 1040, Schedule A, you may qualify to deduct medical expenses you paid during the year for yourself, your spouse and any dependents. Deductible medical expenses include medical insurance premiums, Medicare supplement insurance, and premiums for a qualified long-term-care plan that you paid. You may not include any portion of medical insurance premiums paid by your employer. The total of the medical expenses you claim must exceed 7.5 percent of your adjusted gross income. After December 31, 2012, you may deduct the amount of medical expenses that exceeds 10 percent of your adjusted gross income.
- Agingcare.com: Tax Tips for Caregivers –- Claiming a Parent as a Dependent
- USA Today: Supporting a Parent? Check for Tax Breaks
- TurboTax: Can You Claim Your Elderly Parents on Your Taxes?
- Bankrate.com: Tax Help in Caring for an Aging Parent
- IRS Courseware: Gross Income Test
- IRS.gov: Personal Exemptions and Dependents
- IRS.gov: Topic 502 – Medical and Dental Expenses
Amber Keefer has more than 25 years of experience working in the fields of human services and health care administration. Writing professionally since 1997, she has written articles covering business and finance, health, fitness, parenting and senior living issues for both print and online publications. Keefer holds a B.A. from Bloomsburg University of Pennsylvania and an M.B.A. in health care management from Baker College.