Adult Day Care Centers and providers offer companionship and care for older adults who need assistance or supervision throughout the day. Paying for adult day care is one of the largest expenses faced by working adults with a dependent parent or a child with a disability. The good news is that there is a tax credit available to assist working caregivers defray the costs of adult day care.

To qualify for the tax credit, you must have a dependent who has lived with you for more than half the year and cannot be left alone.

Qualifying Dependents

Qualifying dependents may be:

  • A spouse who is mentally or physically incapable of self-care
  • An individual who is mentally or physically incapable of self-care and either
    • is your dependent or could have been your dependent, except that their income is too high ($4,150 or more)
    • jointly files a return

Although you can no longer receive a deduction for claiming a parent or child as a dependent, you can still receive this tax credit if your parent or other relative qualifies as a dependent. In order to do so, you must provide more than half of their support for the year. Support consists of money spent to provide food, lodging, clothing, education, medical and dental care, recreation, transportation, and other necessities.

You may still be able to claim your parent as a dependent if you pay more than 10 percent of your parent’s support and, collectively with others, contribute to more than half of your parent’s support for the year. Only a comprehensive plan from the experienced Medicaid planning and applications attorney serving Chester County, Robert Slutsky, can ensure the best care for you or your loved one while providing maximum ability to preserve financial resources.

How Much Is the Tax Break?

This credit may be worth between 20% to 35% of your qualifying costs for care, depending upon your income. You may claim up to $3,000 of your total costs if you have one qualifying dependent. If you have two or more dependents, then you may claim $6,000. For example, if you spent $10,000 on care, you may use $3,000 of it toward the credit.

If you earn $15,000 or less and have the maximum $3,000 eligible for the credit, then you will multiply $3,000 by 35% to calculate the credit. If you earn $43,000 or more, you multiply $3,000 by 20%. A tax deduction decreases your taxable income; a tax credit is directly subtracted from the tax that you owe.

How to Qualify

To qualify for this tax break, the care may be provided by an individual or a licensed care center in or out of the home. However, a spouse, dependent, or the child’s parent is not permitted to be the care provider. The primary focus of the care must be the dependent’s well-being and safety. The care expenses are not permitted to include amounts you pay for food, lodging, clothing, education, and entertainment.

If you would like to explore whether your child or dependent will qualify for Medicaid to help cover the cost for adult day care, Call Slutsky Elder Law, your trusted attorney for Medicaid applications and planning in Montgomery County today, at (610) 940-0650.

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