Preparing for Tax Season

Now that the fun and happiness of the holidays are over, more and more advertisers are coming forward to remind us of our favorite Uncle Sam experience -- tax time!! Things change over the years and it is always good to take a look to see what has changed with the folks. I have some pointers from AARP (American Association of Retired Persons). I am not a tax or financial professional so please consult with one before making any decisions.

1. Claim a portion of long-term care insurance premiums. The older you are, the higher the amount you can claim. Here's the scale: Age 40 or under, the maximum claimable amount is $350; 41 to 50, $660; 51 to 60, $1,310; 61 to 70, $3,500; 71 or over, $4,370.


2. Deduct the room and board costs of an assisted living facility if the resident is there mainly for medical purposes and is getting staff assistance to perform normal activities of daily living, such as bathing and dressing, or has cognitive impairment that requires supervision. The services are deductible, too. They must be part of a plan of care prescribed by a licensed health care provider for a chronically ill person.


4. Do you work but pay a home health aide to take care of your spouse or dependent? You may be able to claim a credit of up to $1,050 on up to $3,000 in dependent (or spouse) care expenses. That credit is shaved directly off your bottom-line tax bill; it is not a deduction from your taxable income.


5. If you contributed after-tax income to your retirement account, a percentage of your annual distribution may be tax-free. The logic for this, says Steber, is that if you already paid taxes on money before you put it into the account, it shouldn't be taxed again when it comes out.

6. There are some tax issues for caregivers as well. See elderlcarelink and Caring.com. I also have a previous post on a page 'Caregivers Topics' that refers to this as well.

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