Taxes When You Take Care of an Aging Parent

Caring for an aging parent can be expensive, time-consuming, and emotionally demanding — but it can also come with tax benefits that help offset some of the financial cost. The key question is whether your parent qualifies as your dependent.

A parent can qualify as your dependent under the "qualifying relative" rules if they meet four tests: (1) they're not a qualifying child of anyone else; (2) they had gross income below the exemption amount ($5,050 in 2024) — note that Social Security income generally doesn't count toward this test; (3) you provided more than half their total support during the year; and (4) they're related to you in a qualifying way (parent qualifies). If your parent meets all four tests, you can claim them as a dependent, which doesn't provide a personal exemption under current law but does unlock other benefits.

If your parent is your dependent, you may be able to include their medical expenses with your own for the purposes of the medical expense deduction. Qualifying medical expenses you pay for a dependent parent — including doctors, hospitals, prescriptions, hearing aids, eyeglasses, in-home care, and a portion of nursing home costs if the primary reason for the nursing home stay is medical — can all be added to your deductible medical expenses. Because the threshold is 7.5% of AGI, years with very high medical expenses (surgery, extended care, nursing home placement) are often the years the deduction actually produces a tax benefit.

If you pay someone to care for your parent in your home so you can work, and your parent qualifies as your dependent and is physically or mentally unable to care for themselves, the care expenses may qualify for the Dependent Care Credit or a Dependent Care FSA through your employer. These benefits are more commonly thought of as childcare benefits, but they apply equally to care for a disabled dependent adult. The credit covers up to $3,000 in expenses for one qualifying person, and a Dependent Care FSA allows you to set aside up to $5,000 pre-tax.

If multiple siblings share the cost of supporting a parent and no single sibling provides more than half the support, there's a provision called a Multiple Support Agreement (Form 2120) that allows one sibling to claim the parent as a dependent in a given year, with the others signing the agreement. The siblings can rotate who claims the parent each year. This can only be used when the siblings together provided more than 50% of the support and no single sibling provided more than 50%. Finally, if your parent has significant assets or a large estate, it's worth coordinating tax planning between the generations — a parent with taxable income may benefit from gifting appreciated assets or from other strategies that work better at the family level.