Available Tax Deductions for Taking Care of Elderly Parents

The U.S. tax code offers several provisions to ease the financial responsibility of supporting an elderly parent. If you cover your parent’s expenses, you may be able to claim them as a dependent, which unlocks various tax deductions and credits. These benefits recognize the monetary contributions of caregivers, but understanding the specific requirements is the first step to determining your eligibility.

Qualifying Your Parent as a Dependent

To access any related tax benefits, your parent must meet the Internal Revenue Service (IRS) criteria for a “qualifying relative” by satisfying four distinct tests. You cannot claim your parent as a dependent if they fail even one of these tests, which require a careful review of their finances and the support you provide.

The “Not a Qualifying Child Test” means your parent cannot be the qualifying child of any taxpayer. The “Relationship Test” is met because the individual is your parent, which includes a biological, step, or foster parent.

For the “Gross Income Test,” your parent’s gross income for the 2025 tax year must be less than $5,200. This amount includes taxable sources like wages, interest, and dividends. Social Security income is not included in this calculation unless other income sources make the Social Security benefits taxable.

Under the “Support Test,” you must prove you provided more than half of your parent’s total support for the year. Support includes the total amount spent on their needs, such as food, clothing, transportation, and recreation. If your parent lives with you, the fair rental value of their room and their share of utilities count as support. Medical and dental care costs you pay are also included in the calculation.

If multiple people contribute to a parent’s support but no one provides more than 50%, a “Multiple Support Agreement” may be used. This allows one person to claim the dependent if the group collectively provides over half the support. The person claiming the dependent must have provided more than 10% of the support. Every other person who contributed more than 10% must agree not to claim the dependent by signing a declaration, which is formalized on IRS Form 2120.

Available Federal Tax Benefits

If your parent is a qualifying relative, several federal tax benefits may be available. These benefits can reduce your tax liability or lower your taxable income. Each has its own rules, so it is important to see which apply to your situation.

Credit for Other Dependents

You may be able to claim the Credit for Other Dependents for a qualifying parent. This nonrefundable tax credit is worth up to $500 and directly reduces the tax you owe. The credit begins to phase out for taxpayers with an adjusted gross income (AGI) over $200,000, or $400,000 for those married filing jointly.

Medical Expense Deduction

You can include medical expenses paid for your dependent parent with your itemized deductions. This allows you to deduct the portion of total medical expenses that exceeds 7.5% of your AGI. Qualifying expenses include prescription drugs, hearing aids, and long-term care insurance premiums. Nursing home costs can also be included if the primary reason for the stay is medical care.

Head of Household Filing Status

Claiming a parent as a dependent may allow you to use the Head of Household filing status, which has a higher standard deduction ($22,500 for 2025) and more favorable tax brackets. To qualify, you must be unmarried and pay more than half the cost of keeping up a home for the year. For a dependent parent, they do not have to live with you, as long as you pay more than half the cost of maintaining their main home.

Child and Dependent Care Credit

This credit is available if you paid for your parent’s care so you could work or look for work. Your parent must have lived with you for more than half the year and been physically or mentally incapable of self-care. For 2025, you can claim a percentage of up to $3,000 in care expenses for one qualifying person, with the credit ranging from 20% to 35% based on your AGI.

Using Pre-Tax Accounts

If you have a Flexible Spending Account (FSA) or Health Savings Account (HSA), you can use these pre-tax funds for your dependent parent’s qualifying medical expenses. Using these accounts allows you to pay for costs with pre-tax dollars, which reduces your overall taxable income.

Required Information and Documentation

Proper record-keeping is necessary when claiming tax benefits for an elderly parent. Gathering all information and documentation before preparing your tax return will streamline the process and provide support should the IRS have questions.

You will need your parent’s full name, Social Security Number (SSN), or Individual Taxpayer Identification Number (ITIN). You must also have a precise calculation of their total gross income for the year to ensure they meet the income test.

You must keep all receipts, canceled checks, and bank statements that substantiate the support you provided. This includes proof of payment for rent, utilities, food, and medical bills. Using a worksheet to calculate the total support provided by all contributors is recommended to demonstrate that you met the support test.

If using a Multiple Support Agreement, you must get a signed statement from each person who contributed over 10% of the support, waiving their right to the claim. You will complete Form 2120, but keep these signed statements for your records.

Claiming the Benefits on Your Tax Return

After confirming your parent qualifies as a dependent and gathering your documents, the final step is to report everything correctly on your tax return. This involves entering information on Form 1040 and attaching other required forms and schedules.

To claim your parent as a dependent, enter their name, SSN, and relationship to you in the “Dependents” section of Form 1040. You will also check the box indicating they qualify for the Credit for Other Dependents.

If you are itemizing and claiming medical expenses, you will use Schedule A (Itemized Deductions). List the total qualifying medical expenses on the designated line, and the form will guide you through the calculation applying the 7.5% of AGI limitation.

To claim the Head of Household filing status, check the appropriate box at the top of Form 1040. For the Child and Dependent Care Credit, you must complete and attach Form 2441, Child and Dependent Care Expenses. You will then transfer the calculated credit amount to your Form 1040.

Schedules like Schedule A and forms like Form 2441 are attached to your Form 1040. If claiming a dependent under a Multiple Support Agreement, you must also attach Form 2120. Other documentation, such as the signed statements from other supporters, should not be sent to the IRS but kept with your personal tax records.