Money Fix: Tax advantages for elder care

It's the right thing to do to care for mom and dad as they age. But no good deed goes unrewarded: You may qualify for federal tax breaks.

"If your parent qualifies as your dependent under the IRS guidelines, an additional exemption may be available to you," says Roberto Viceconte, a partner with Lake Success accounting firm WeiserMazars. "Medical and chronic-care expenses may also be deductible."

What's the criteriafor the exemption?
You must provide more than half the support of the relative, (who doesn't have to live with you), more than half the expenses of the home he or she lives in, and your relative must have a taxable income of less than the annual exemption amount, $3,700 for 2011. Even if you can't claim the relative as a dependent because of the income limit, you may still deduct costs such as prescription drugs.

Other options. If, say, you made structural changes to your home to accommodate Mom, this expense may be allowed as an itemized deduction if it exceeds the increase in value of the home, says Mark Steber, chief tax officer for Jackson Hewitt Tax Service.

If you paid someone to care for your loved one while you worked or looked for work, you may be eligible for the Child and Dependent Care Credit of up to 35 percent of the expenses paid for that care, up to the maximum of $3,000, explains Rocco Carriero, a wealth adviser with Ameriprise Financial in Southampton.

For more, check out IRS publication 502: "Medical and Dental Expenses" at irs.gov and talk to your accountant.