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A Dependency Exemption Reminder for Folks Who Help Care for a Parent

If you are helping take care of a parent and you claim a dependency exemption on your tax return, be sure to document your costs in supporting the parent. A recent court case held that the taxpayers who were caring for an ailing parent didn’t have enough documentation to prove that they provided more support than the parent provided. The parent received social security and other tax free income and was not required to file a tax return. The parent’s low and tax free income was not enough evidence to substantiate the taxpayer’s claim.

In order to avoid this scenario, make a ledger of all of the payments you make on your parent’s behalf. Maintain clean records of what the parent is contributing to their own support as well. Some other things to consider is where the parent is living. If they are living in your home a portion of the rent/mortgage, utilities, food, and other similar costs should be reasonably allocated to the parent’s support.

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January 8, 2016

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