(NewsUSA) – It’s time to stop worrying that your adult, out-of-work kid may never find a job that lets him move back out of your house, and instead think of him the way the IRS potentially does: as a big, fat tax deduction.
That’s right, one consequence of the sputtering economy is that it’s turned otherwise distressing family circumstances — those “boomerang kids,” for instance — into windfalls for deduction hunters. Another bonanza, via the tax code? So many senior citizens have seen their nest eggs battered over the past few years that an estimated 9.7 million adults over age 50 are now providing some level of potentially deductible care for their own parents.
“In many cases, you’re looking at three generations living under one roof,” says Elaine Smith, master tax advisor at H&R Block. “And those caregivers — the so-called ‘sandwich generation’ — are seeing their expenses rise as a result of their increased responsibilities.”
Just how much of a windfall are we talking? And who’s eligible? Read on for some tips:
* The $3,700 exemption. That’s the reduction to your taxable income you’ll realize for each qualifying child or relative. The IRS is quite specific about the definition of “qualifying,” but — in the case of returning adult children — one thing you definitely need to keep in mind is that their total annual income must be less than $3,700.
* Aging parents. Unlike your child, your mom and dad needn’t live with you to qualify as dependents. If they’re in a nursing home or assisted living facility, say, the IRS feels your pain if you’re footing more than half their bills. In which case, the medical expenses you pay are deductible on your return. “You could easily be looking at about $40,000 in expenses racked up at one of those facilities,” says Smith, “which translates into thousands of dollars in savings on your tax bill.”
* Adult children. Staying on the subject of medical expenses, don’t forget any extra after-tax premiums you may be paying to keep qualifying offspring on your insurance plan.
The IRS says the average taxpayer needed 23 hours to do their 2010 tax return. If that sounds too torturous, you might want to consider using a professional preparer like H&R Block (www.hrblock.com), which offers guaranteed in-person services at its retail offices nationwide as well as the only face-to-face online preparation through Block LiveSM.
Oh, and don’t feel too smug if your adult kid hasn’t boomeranged on you yet. According to a Twentysomething Inc. poll, 85 percent of 2011 college graduates surveyed said they planned on moving back home with their parents.