what
can you do when your parents are struggling to pay medical bills and
your kids can't land jobs? Seniorhelpers home health care of brick, and
toms river new jersey has the answer
Being
surrounded by loved ones can be a costly proposition. At Senior helpers
of ocean and burlington county nj we understand the struggles that the
sandwich generation encounter when providing care for their elderly love
one. Much has been made of the recession's effect on recent college
graduates; they're pouring lattes and surfing sofas. And aging parents
can run through money at rates that would challenge Donald Trump's next
wife. At senior helpers in home care in jackson nj and manchester nj. we
have some helpful information. There are some tasty tax breaks for the
Sandwich Generation who are helping family members through tough times.
That kid on the couch could save you almost $6,000 in taxes, according
to sample calculations performed for Reuters by the Tax Institute at
H&R Block. The potential savings for supporting an aging parent are
even greater.
Here's how the tax code can help you take care of everybody.
--
Watch your child's income. If you have an adult child living at home,
and they're only earning money around the edges doing odd jobs, it might
help if they don't make too much. "The magic number is $3,650,"
explained Kathy Pickering, executive director of the tax institute, a
research affiliate of the tax preparation firm. "An adult child who
moves back home and earns less than $3,650 in a year meets the
dependency requirement that enables you to claim him as a qualifying
relative."
You
wouldn't want to discourage work, of course, but if it looks like your
recent graduate's income is going to be borderline, "you might want to
think about an unpaid internship instead," says Pickering.
--
Take the breaks. Once your adult child qualifies as a dependent, you
get an additional personal exemption for him. And you can include the
extra medical bills you're probably paying (like the premiums for
keeping him on your plan) in your medical expenses. The bottom line? A
family with $120,000 in income whose boomerang kid produces an
additional $10,000 in medical expense would see their federal tax bill
drop from $14,369 to $8,706, saving $5,663, says Pickering.
--
Work with your siblings to help Mom. Unlike your child, your aging
parent doesn't have to live with you to qualify as a dependent. If she
is in a nursing home or assisted living facility and you provide more
than half of her support, she's a dependent. You don't even have to do
it all by yourself -- all of the money that you and your siblings put in
together can be counted as one.
Let's
say your mother's expenses total $55,000, and she spends $25,000 a year
of her Social Security payments and savings. If you pay $15,000 and
your sister pays $15,000, you or your sister can claim her as a
dependent. Either sibling can claim her on their return: You can assign
Mom to the one with the highest tax bracket, or take turns every year.
--
Consider the gift-tax exemption. Taxpayers who want to help relatives
can give them $13,000 a year, without triggering any gift-tax
consequences, notes Deborah Cox, vice president and wealth adviser with
JP Morgan Private Bank. That's the limit for one individual giving money
to another individual; a couple could give another couple as much as
$52,000 every year. If you are paying medical costs for your parents,
you can pay them directly to the provider and they won't even count
against that limit.
--
Once your mother is a dependent, all of her medical expenses become
yours, for the purpose of deducting them on your tax return. If that
same $120,000 couple had a dependent parent with $40,000 in medical
expenses (easy to do if she lives in an assisted living facility or
nursing home), the family's tax bill would be $5,499, says Block's tax
institute. That's a savings of $8,870. And if they are taking care of
Grandma AND have that boomerang kid on the couch, their tax bill would
fall all the way to $1,201, saving them $13,168. That ought to cover the
therapy bills nicely.
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