Supporting Your Parents

Many children are eventually called upon to support their parents. If you are among this group, you may qualify for some valuable tax breaks.

A $4,000 dependency exemption can be claimed for each parent in 2016 if criteria is met for five specific tests. The most relevant of these are the $4,050 gross income test and the "greater-than-50%-support" test.

If you are single and a parent qualifies as your dependent, you may be able to file as head of household and receive the lower marginal tax rates and larger standard deduction of that filing status. You must pay more than 50% of the cost of maintaining the household in which your parent resides; however, you do not need to live in the same house.

If you pay qualified expenses for a parent who is physically or mentally incapable of self-care and you live in the same house as your parent, you may be able to claim a dependent care credit. To qualify, the care must be necessary in order for you to hold gainful employment, though the care can be received either inside or outside the home.

For most taxpayers, this credit is limited to 35% of the first $3,000 ($6,000 for two qualifying dependents) of eligible expenses incurred. If you provide more than half of their support for the year, you may also deduct medical expenses paid on behalf of your parents, even if they do not qualify as your dependents.