• Supporting Our Clients and the Community During the COVID-19 Pandemic.
    • Skip to primary navigation
    • Skip to main content
    • Skip to primary sidebar
    • Skip to footer
    • Home
    • Our Firm
      • About Our Firm
      • Attorney and Staff Profiles
      • Communities We Serve
        • Bergen County
        • Clifton
        • Essex County
        • Hudson County
        • Hunterdon County
        • Middlesex County
          • Edison
          • Woodbridge
        • Morris County
        • Passaic County
        • Somerset County
          • Hillsborough
          • Warren
        • Sussex County
          • Franklin
        • Union County
          • Plainfield
    • Services
      • Asset & Business Planning
      • Estate And Gift Tax Figures
      • Estate Planning Services
      • Incapacity Planning
      • IRA & Retirement Planning
      • Legacy Planning Services
      • Medicaid and Elder Law
      • SECURE Act
      • Special Needs Planning
      • Trust Administration
    • Webinars
    • Resources
      • Elder Law
        • Elder Law & Medicaid Definitions
        • Elder Law reports
        • Elder Law Resources
          • Plainfield Elder Law
      • Estate Planning
        • Estate Planning Checkup
        • Estate Planning Definitions
        • Incapacity Planning Definitions
        • Is Your Estate Plan Outdated?
        • New Jersey Estate Planning Resources
        • Top 10 Estate and Legacy Planning Techniques
      • Free Estate Planning Worksheet
      • Free Seminars
      • Frequently Asked Questions
        • Business Succession Planning
        • Estate Planning
        • Elder Law
        • Estate Planning for Women
        • Frequently Asked Questions for Families Without an Estate Plan
        • Legacy Wealth Planning
        • LGBTQ Estate Planning
        • Medicaid
        • Trust Administration & Probate
        • Wills and Trusts
      • Newsletters
      • Pre Consultation Form
      • Probate and Trust Administration
        • Bereavement Resources
        • How to Know if You Need Extra Help With Your Grieving
        • Loss of a Loved One
        • Probate Resources
          • Hillsborough Township Probate
          • Plainfield Probate
        • The Mourner’s Bill of Rights
        • Things You Need To Do When a Loved One Passes Away With a Trust
        • Things You Need To Do When a Loved One Passes Away With a Will
        • Trust Administration & Probate Definitions
      • Published Books
    • Reviews
      • Our Reviews
      • Review Us
    • Blog
    • Contact Us

    Augulis Law Firm

    New Jersey Estate Planning Information Center

    Connect with us today(908) 222-8803

    • Attend A Seminar
      • Attend A Webinar
    • Facebook
    • Twitter
    • Linkdin
    • Youtube
    • Instagram
    Committed to helping New Jersey families preserve and protect their wealth.
    Home » Estate Planning Articles » Tax Breaks for the Sandwich Generation

    Tax Breaks for the Sandwich Generation

    May 31, 2012

    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.

    About Alan Augulis, Estate Planning Attorney

    Mr. Augulis founded his Warren, New Jersey law firm so that he could focus his practice in the areas of advanced estate planning and tax law. Mr. Augulis has invested considerable time and energy helping to educate others on the topic of estate planning and has become a sought-after speaker in the tax and estate planning arena because of his informative and entertaining seminars.

    Primary Sidebar

    Augulis Law Firm

    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
    • Twitter
    • Linkdin
    • Youtube
    • Instagram

    Testimonials

    Client Review
    August 4, 2020
        

    Very happy with work. Everything explained clearly and concisely and all my questions were answered completely. Process of putting together plan and review of documents was very organized and easy to understand.

    norm

    Where we are

    Augulis Law Firm
    5 Mountain Blvd. Suite 5
    Warren Twp, NJ 07059
    Phone: (908) 222-8803
    Fax: (908) 222-8815

    See Larger Map Get Directions

    Office Hours

    Monday9:00 AM - 5:00 PM
    Tuesday9:00 AM - 5:00 PM
    Wednesday9:00 AM - 5:00 PM
    Thursday9:00 AM - 5:00 PM
    Friday9:00 AM - 5:00 PM

    Map

    map

    Footer

    • Advantages of Working With Our Firm
    • Disclaimer
    • Privacy Policy
    • Sitemap
    • Contact Us

    Connect with Us

    • Facebook
    • Twitter
    • Linkdin
    • Youtube
    • Instagram
    footer-logo

    Augulis Law Firm
    All Right Reseved.

    Attorney Advertisement

    © 2023 American Academy of Estate Planning Attorneys, Inc.