• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Unsworth LaPlante, PLLC

Vermont Estate Planning Attorneys

Vermont: (802) 879-7133

Attend A Free Workshop
  • Home
  • Our Firm
    • About Our Firm
    • Meet Our Team
    • What to Expect When Working with Us
  • Services
    • Estate Planning
    • Incapacity Planning
    • IRA & Retirement Planning
    • Legacy Planning
    • LGBTQ Estate Planning
    • Medicaid Planning & Elder Law
    • Pet Planning
    • Special Needs Planning
    • Trust Administration
    • Young Families Planning
  • Resources
    • Articles
    • Elder Law Reports
    • Elder Law Resources
      • Burlington
      • Montpelier
      • Rutland
      • St. Johnsbury
      • White River Junction
    • Estate And Gift Tax Figures
    • Free Estate Planning Worksheet
    • Frequently Asked Questions
      • Elder Law
        • In-Home Elder Care
        • Medicaid
        • Planning for Long-Term Care
      • Estate Planning
        • Business Succession Planning
        • Estate and Gift Tax
        • Estate Planning for Blended Families
        • Estate Planning for Parents
        • FAQs for Families Without an Estate Plan
        • LGBTQ Estate Planning
        • Taxes on Inheritances in Vermont
      • Incapacity Planning
      • IRA & Retirement Planning
      • Gift, Estate, and Inheritance Taxes
      • Legacy Wealth Planning
      • Philanthropy and Estate Planning
      • Pet Planning
      • Revocable Living Trust
      • Special Needs Planning
      • Trust Administration
      • Trusts
      • Wills
    • Is Your Estate Plan Outdated?
    • Medicaid Resources
      • Medicaid Analysis Worksheet
      • Medicaid Guide
      • Vermont Medicaid
    • Newsletters
    • Presentations
    • Reports
      • Advanced Estate Planning
      • Basic Estate Planning
      • Estate Planning for Niches
    • SECURE Act
    • Top Estate Planning Techniques
  • Webinars/Seminars
  • Reviews
    • Our Reviews
    • Review Us
  • BLOG
  • Contact
Home » Estate Planning Articles » Tax Breaks for the Sandwich Generation

Tax Breaks for the Sandwich Generation

May 31, 2012 by Stephen Unsworth

Compliments of Our Law Firm,
By: The American Academy of Estate Planning Attorneys

As our population ages, many of us find ourselves in a role we never quite anticipated: we’re serving as caregivers for our elderly parents while still raising children of our own. The emotional burden is one that most of us accept with grace and love. The financial challenges, on the other hand, can be a little harder to overcome. That’s why it’s important to know when you can claim your aging or ill parent as a dependent for income tax purposes.

50 Percent: The Magic Number

If, during the tax year in question, you provided more than one-half of your parent’s support  for food, shelter, medical care, and clothing, then your mom or dad is your dependent in the eyes of the IRS. Keep in mind that expenses covered by insurance, Medicaid, and Medicare benefits do not count.

Here’s an example:

Your father lives in your home. You pay the mortgage and utilities and provide all of his food and transportation. If you added it up, the value of this would come to about $800 per month, or $9,600 per year. He gets Medicare benefits of $4,000, which aren’t  enough to cover his annual medical expenses of about $7,000. He also receives $600 in Social Security benefits each month for an annual total of $7,200. He uses his Social Security to cover his remaining medical bills, pay for clothing, buy gifts for the grandkids, and take care of other miscellaneous expenses. All told, your dad’s expenses add up to about $16,600 per year, of which you cover approximately 58%. This means that your father qualifies as your dependent.

Exception to the 50 Percent Rule

If you do not provide more than 50% of your parent’s support, all is not lost. You might still be able to claim your mom or dad as your dependent if all of the following are true:

  • You provide at least 10% of your parent’s support.
  • You and others besides your parent provide more than 50% of your parent’s support.
  • No one person provides more than 50% of your parent’s support.
  • Every other person who contributed more than 10% to your parent’s support waives the right to claim your parent as a dependent by signing Form 2120.
  • You attach each applicable Form 2120 to your tax return.

The Benefits of Claiming Your Parent as a Dependent

The ability to claim your parent as a dependent opens up a number of tax breaks. Perhaps the most valuable is the opportunity to deduct your parent’s medical expenses.

Provided your mom or dad qualified as your dependent on the date the services were performed or the date they were paid for, you can treat any medical bills incurred by your parent the same as medical bills incurred by you, your spouse, or your children. So, assuming you itemize your deductions and your family’s total medical expenses exceed 7.5% of your income, you can claim a deduction for your family’s medical bills – including those incurred by your mom or dad to the extent those expenses exceed 7.5% of adjusted gross income.

Even if you can’t take advantage of the medical deduction, you may be able to claim a dependent care deduction if both of the following are true:

  1. Your parent lives with you.
  2. Your parent cannot care for him or herself.

Last but not least, if your mom or dad does not claim a personal exemption for him- or herself, you can claim your parent’s personal exemption.

While all of these tax breaks help to ease the financial burden that can accompany caring for your aging parent, the best way to lighten your financial load is to plan ahead. Long-term care insurance, Medicaid planning, and other estate planning tools can make your parents’ twilight years easier for your whole family.

An experienced estate planning attorney can help you and your parents plan ahead for the financial concerns that aging brings, so that you can focus on enjoying every moment you have together.

Primary Sidebar

Elder Law and Medicaid Planning Attorneys

Unsworth LaPlante, PLC

DOWNLOAD OUR FREE ESTATE PLANNING WORKSHEET

There's a lot that goes into setting up a comprehensive estate plan, but with our FREE worksheet, you'll be one step closer to getting yourself and your family on the path to a secure and happy future.

  • This field is for validation purposes and should be left unchanged.

Follow Us

  • Facebook
  • Instagram
  • LinkedIn
  • Twitter
  • YouTube

Essex Junction, VT

26 Railroad Ave
Essex Junction, VT 05452
United States (US)
Phone: (802) 879-7133
Fax: (802) 879-0408

Map

unsworth_sidbr_map

Office Hours

Monday8:00 AM - 4:00 PM
Tuesday8:00 AM - 4:00 PM
Wednesday8:00 AM - 4:00 PM
Thursday8:00 AM - 4:00 PM

Footer

footer-logo
  • Facebook
  • Instagram
  • LinkedIn
  • Twitter
  • YouTube

The information on this Vermont Attorneys & Lawyers / Law Firm website is for general information purposes only. Nothing on this or associated pages, documents, comments, answers, emails, or other communications should be taken as legal advice for any individual case or situation. This information on this website is not intended to create, and receipt or viewing of this information does not constitute, an attorney-client relationship.

American Academy of Estate Planning Attorneys, Inc. Privacy Policy | Contact Us | Disclaimer | Site Map | Powered by American Academy of Estate Planning Attorneys

© 2023 American Academy of Estate Planning Attorneys, Inc.