Tax Benefits for Caregivers and Family Support Providers: A Guide to What You Can Actually Claim

Let’s be honest. Caring for a loved one is a labor of love, but it’s also a job. It comes with real, tangible costs—gas for endless doctor’s appointments, medical supplies the insurance won’t cover, maybe even a portion of your mortgage if they live with you. The financial strain can feel like a heavy, silent weight on top of the emotional one.

Here’s the deal, though: the tax code offers a few lifelines. They aren’t always simple, and you have to know where to look, but they can provide some genuine relief. Think of them as a small way for the system to say, “We see you, and we want to help.” Let’s untangle the options so you can keep more of your hard-earned money.

The Big One: Claiming a Dependent

This is often the first and most significant tax benefit to explore. If the person you’re caring for qualifies as your “dependent,” a whole new world of deductions and credits can open up. The rules can be a bit of a maze, but we’ll walk through them.

Who Counts as a Dependent?

The IRS has a specific checklist. To claim someone as a dependent, you generally need to meet these tests:

• Member of Household or Relationship Test: The person must live with you for the entire year as a member of your household, or be related to you (parent, grandparent, sibling, etc.). Aha—here’s a key exception: your parent does not have to live with you if you provide more than half of their support and they meet the other tests.
• Gross Income Test: The person you’re supporting must have gross income below a certain threshold (for 2023, it was $4,700). This is where many caregivers of elderly parents get tripped up. Social Security benefits? Often, only the taxable part counts. But if Mom has a sizable pension, it might push her over the limit.
• Support Test: This is the big one. You must provide more than half of the person’s total financial support for the year. This includes food, housing, medical care, transportation… you know, all the things you’re likely already providing.

If you’re sharing caregiving duties with a sibling, things get trickier. You can’t both claim Mom. Only one of you can claim her, and it has to be the person who provides more than 50% of the support. Sometimes, it makes financial sense for the sibling in the higher tax bracket to claim the dependent, and then they can reimburse the primary caregiver. It’s a family conversation worth having.

The Medical Expense Deduction Maze

Okay, this one is a bit of a double-edged sword. If you itemize your deductions (meaning you don’t take the standard deduction), you can deduct medical and dental expenses you paid for yourself, your spouse, and your dependents.

The catch? You can only deduct the amount that exceeds 7.5% of your Adjusted Gross Income (AGI). So, if your AGI is $60,000, you can only deduct medical expenses over $4,500. It’s a high bar.

But if you clear it, what can you include? Honestly, more than you might think:

• Doctor and dentist visits, hospital care.
• Prescription medications and insulin.
• Long-term care services and premiums for long-term care insurance (within limits).
• Medical equipment like wheelchairs, walkers, and oxygen tanks.
• Even modifications to your home—like ramps or grab bars—if they are primarily for medical care.
• Mileage driven for medical purposes. You can deduct a standard rate per mile (it was 22 cents for 2023). Track those trips!

The Dependent Care Credit: For When You Can Work

This credit is a lifesaver for caregivers who need to pay for care so they can work or look for work. It’s not for the medical care of the person, but for the cost of care itself.

Let’s say you pay an in-home aide to look after your disabled father while you’re at the office. Or you pay for an adult daycare program. Those expenses might qualify for the Child and Dependent Care Credit.

The person you’re caring for must be a dependent who is physically or mentally incapable of self-care. And, well, the credit is non-refundable for dependents other than children, which means it can reduce your tax bill to zero, but you won’t get a refund from it. Still, it’s a powerful tool to offset the cost of care that enables you to earn an income.

Head of Household Filing Status

This is a simple but powerful one. If you are unmarried, pay more than half the cost of keeping up a home, and have a qualifying person (like a dependent parent) live with you for more than half the year, you can file as “Head of Household.”

Why does this matter? The standard deduction is significantly higher than it is for someone filing as “Single.” Your tax brackets are also more favorable. It’s one of the most straightforward ways to lower your overall tax bill simply because of your caregiving situation.

What About Getting Paid? The Complex World of Family Caregiver Payments

This is a trend we’re seeing more and more. Sometimes, a care recipient will use their own funds (or a family trust) to pay a family member for caregiving services. Is this income taxable? In a word, yes.

If you are paid to provide care, the IRS generally views that as self-employment income. You’re supposed to report it on a Schedule C and pay self-employment tax. It’s messy. It adds complexity. But it can also be a legitimate way to financially support a family member who has left a job to provide care.

The key is to treat it like a real job. Have a written agreement. Keep meticulous records of hours worked and payments received. It feels awkward, but it keeps everything above board.

A Quick-Reference Table for the Weary Caregiver

Benefit	What It Is	Key Thing to Remember
Dependent Exemption	Allows you to claim a person as a dependent, potentially making you eligible for other credits.	You must provide more than half of their financial support.
Medical Expense Deduction	Deduct qualified medical expenses that exceed 7.5% of your AGI.	You must itemize deductions, which many people no longer do.
Dependent Care Credit	A credit for costs of care that allow you to work.	The care must be for a dependent who cannot self-care so you can work.
Head of Household	A more favorable tax filing status.	You must be unmarried and have a qualifying dependent live with you.

Getting Your Ducks in a Row: Documentation is Your Best Friend

You can’t just tell the IRS you spent money. You have to show them. Start a simple system—a folder, a spreadsheet, an app, whatever works for you. Track everything:

• Receipts for all medical purchases and home modifications.
• A mileage log for medical trips (date, destination, purpose, miles).
• Proof of housing costs and bills you pay.
• Records of any payments you receive for caregiving.

This paperwork might feel like the last thing you have energy for. But think of it as building a shield. It protects you, validates your effort, and turns your care into something the tax system can understand and, finally, acknowledge.

In the end, navigating these tax benefits is a lot like caregiving itself. It requires patience, attention to detail, and a willingness to advocate fiercely for what’s right. It’s not about a windfall. It’s about reclaiming a few resources to help you continue doing what you do best: providing a foundation of love and support when it’s needed most.