Your Parents

1. If you provide over half of your parent's support and your parent has less than $3,500 of gross income, then you can claim your parent as a dependent on your tax return. If you and other family members are all contributing to the support of a parent and as a whole provide over half of your parent's support (and no one person is providing over 50% of the support), then you need to decide which person gets to take the dependency exemption on his or her own tax return. The person needs to be providing over 10% of the support and Form 2120 needs to be filled out for every other over 10% provider who has agreed not to take the dependency exemption on their own return.
   
   
2. If you can claim your parent as a dependent and you pay over half of the cost of maintaining your parent's household, then "Head of Household" status can be used on your tax return. Head of Household has better tax rates and a higher standard deduction than "Single" status. If you meet the above requirements, you can even claim Head of Household status when your parent is in a nursing home or lives in their own home.
   
   
3. If you pay your parents to watch your children while you are at work, those expenses are qualified dependent care expenses and can be used for the dependent care credit.
   
   
4. If you directly pay medical expenses for your parents, you can deduct the expenses on your return (if your total medical expenses exceed 7.5% of AGI). However, if you give your parents cash to pay their medical expenses, you are not eligible to take those expenses on your tax return.
   
   

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