During Holiday seasons, it is the best time of year for loved ones to gather together.
It will also be the perfect time for grandchildren to see their grandparents personally.
But for some folks, older relatives are part of their daily lives, and not always in an optimal way. As we all age, more of us are finding we are becoming parents to our parents.
That role reversal can be costly. An October 2014 Rand Corp. study put the price tag for informal caregiving of elderly people by friends and relatives at $522 billion a year.
That’s why Democratic presidential hopeful Hillary Clinton has proposed a tax credit for family caregivers who are looking after elderly relatives.
In the fact sheet outlining her tax credit proposal, Clinton says family caregivers spend thousands of dollars each year in care expenses. But unlike parents who get a tax credit to help raise their minor children, providers of family elder care get no tax deduction or credit.
“This shouldn’t be this way: Caregiving can be a win-win for our families and our overall health system,” says Clinton on her elder care credit Web page.
$1,200 tax credit
To remedy that, Clinton wants to provide qualifying individuals a 20% tax credit to help them offset up to $6,000 in caregiving costs for their elderly family members. This translates to a $1,200 tax break.
Even better, since it would be a tax credit, it would apply dollar-for-dollar to any tax owed by the caregiver.
The former secretary of state also proposes changing Social Security rules so that unpaid family caregivers get credit toward retirement benefits for this work. This would help family members who quit paying jobs so they can better attend to elderly relatives’ needs.
Clinton’s idea is not new.
A search of the Library of Congress legislative database turned up 49 bills introduced in the current Congress to deal with caregivers’ concerns. Most are related to veterans. A few center on foster care of children. And a couple of bills focus on adult care centers.
One, however, is very close to the Clinton idea, and appears to be the model for the White House candidate’s proposal.
Democratic Sens. Amy Klobuchar of Minnesota and Barbara Mikulski of Maryland introduced the Americans Giving Care to Elders Act in March. The AGE Act would provide a maximum credit of $1,200 for those whose caregiving expenses reach $6,000. The credit would be phased out for higher-income earners.
The senators’ bill, S. 879, is pending in the Senate Finance Committee.
Women’s caregiving role continues
Not to go all girl power, but it’s no surprise that 3 women are leading the push for a tax break for caring for elderly relatives. Statistically, adult daughters bear the brunt of caregiving duties when aging parents need part- or full-time help making it through the day.
These women, and I am one of them as I increasingly tend to the needs of my 81-year-old mother, are the first caregiving defense before a relative requires professional care.
We do so because we love our parents. But our help definitely comes at a cost.
Yes, there already are some tax benefits for caring for an aging parent. But those kick in only after you provide more than half of Mom or Dad’s total support; that is, they must qualify as your tax dependent.
If your folks are anything like my mom, they will want to contribute as much as they can financially for as long as they can. Good for them. Bad for you in your quest to claim a tax break for the care of your elderly parent.
As the country ages, more of us will find ourselves as family caregivers. Giving us a benefit similar to that for parents is a fair move. Source: BankRate