Can I Deduct Gifts to My Elderly Parents?

The IRS allows you to give away money and get a tax deduction. However, the tax deduction normally applies only when you're giving money to a charity; giving money to your parents doesn't count. With that said, you may still give money to your parents in indirect ways and still receive a deduction on the money you use to help them.

  1. Qualified Medical Expenses

    • Payments you make to a qualified medical center for the care of your parents is not subject to gift taxes. You may deduct the amount from your taxable income as well. This allows you to indirectly help your parents, if they need it, by giving money to them for the payment of medical services that they need. You cannot give the money to them, however. You must make payments directly to the medical center.

    Dependent Parent

    • You may claim your parent as a dependent if you pay at least 50 percent of your parent's financial support. This would, in effect, be giving money to your parent. Your parent will be dependent on you, but you may provide money directly to her for any purpose. You will receive a tax deduction under the rules for claiming dependents.

    Benefit

    • You receive the benefit of giving money to your parents and receiving a tax deduction for doing so. Your parents receive money they need, so you both benefit. The IRS' rules for giving money away to your family are generally oriented around gift tax exclusions, but deducting gifts from income taxes allows you to take advantage of lowering your taxable income, thus increasing your net income.

    Consideration

    • Even though you can't take a deduction for giving money to your parents directly, you can still give your parents up to $13,000 per year without paying any gift taxes on this money. This direct gift to your parents might be helpful when your parents don't want to be claimed as dependents, they do not need the money for medical care but still need financial help.

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