Qualifying Relative Rules

• If you want to claim your mom as your dependent, the qualifying relative rules have a number of requirements you must satisfy first. The rules require that you provide more than half of the financial support for your mom, which includes the elder care services you pay for. However, supporting your mom is not enough; the IRS also requires that she not earn gross income of $3,650 or more during any tax year you claim a dependent exemption for her. Your mom's gross income will not include the tax-exempt income she receives, such as Social Security benefits or municipal bond interest. It only includes income that she has an obligation to report on a tax return. Since the dependent you want to claim is a parent, there is no requirement that your mom live with your during the tax year.
  
  

Elder Care Deduction

• The cost of the elder care services that your mom requires is deductible as a medical expense on Schedule A. As a result, this requires that you make an election to itemize deductions instead of claiming the standard deduction. If you do, the total of all medical expenses, not just the elder care, is subject to a 7.5 percent Adjusted Gross Income, or AGI, reduction. In other words, you must subtract 7.5 percent of your AGI from your total medical expenses for the year to arrive at the deductible amount.
  
  

Credit for Elderly

• If your mom lives in your home, you may qualify to claim a tax credit for the elder care expenses you incur. The credit provides more tax savings than a deduction, as it reduces your tax bill on a dollar-for-dollar basis. To qualify, you must also earn income from employment or self-employment, and hiring someone to provide elder care for your mom must be necessary so you can go to work or look for work.
  
  

Head of Household

• Although using the head of household status is available to all taxpayers, the tax savings it provides can help offset some of the expenses you incur hiring elder care for your mother. As long as you are unmarried at the end of the tax year and are eligible to claim your mom as a dependent, filing as head of household entitles you to a larger standard deduction than single filers. In addition, larger portions of your income are subject to lower rates of tax.