Moving an aging parent into your home is a profound lifestyle shift that changes your daily routine, your grocery bills, and your emotional bandwidth. But beneath the surface of rearranging furniture and coordinating doctors’ appointments lies a major financial transition. Multigenerational living alters your tax situation in ways that can either cost you money or provide significant relief—depending entirely on how well you understand the IRS rules.

Millions of Americans find themselves navigating the complexities of caring for an older parent. If you are among them, you are likely absorbing new costs for food, housing, transportation, and healthcare. The tax code recognizes this burden and offers several mechanisms to help offset the financial weight of caregiving. However, these benefits do not apply automatically; you must meet strict criteria to qualify.

Before you file your next return, you need to understand exactly how claiming a parent on taxes works, which expenses you can deduct, and how recent legislative changes for 2025 and 2026 impact your bottom line.

Can You Claim Your Parent as a Tax Dependent?

The gateway to almost all caregiver tax deductions is successfully claiming your parent as a dependent. The IRS classifies an adult dependent as a “Qualifying Relative.” To earn this status, you must pass several specific tests. The two most difficult hurdles are the Gross Income Test and the Support Test.

The Gross Income Test

To qualify as your dependent, your parent must have a limited taxable income. For the 2025 tax year (the taxes you file in early 2026), your parent’s gross taxable income must be less than $5,200. For the 2026 tax year, this limit increases slightly to $5,300.

This threshold often trips people up, but there is a crucial caveat: gross income only includes taxable income. If your parent’s sole source of income is non-taxable Social Security benefits, those benefits do not count toward the $5,200 limit. However, if they have income from pensions, dividends, taxable IRA withdrawals, or part-time work that exceeds the limit, you cannot claim them as a dependent.

The Support Test

You must provide more than 50% of your parent’s total financial support for the year. This requires a bit of math. You must compare the amount you contribute to their living expenses against the amount they contribute themselves—including any money they spend from their own Social Security benefits, savings, or investments.

Total support encompasses:

• Fair market value of their lodging (the room they occupy in your house)
• Groceries and meals out
• Out-of-pocket medical and dental expenses
• Clothing and personal care items
• Transportation costs

If your parent uses their Social Security check to pay for their own groceries and medical bills, and that amount exceeds what you pay for their housing and other needs, you fail the support test.

The “Head of Household” Advantage for Single Filers

If you are unmarried, claiming a parent as a tax dependent unlocks one of the most powerful tax benefits available: the Head of Household filing status. Filing as Head of Household offers wider tax brackets and a significantly higher standard deduction compared to filing as Single.

Consider the stark difference in standard deductions:

That leap in your standard deduction effectively shields thousands of dollars of your income from federal taxes. Interestingly, while the IRS usually requires a dependent to live with you for more than half the year to claim this status, parents are the exception. You can actually file as Head of Household if your dependent parent lives in their own home or an assisted living facility, provided you pay more than half the cost of maintaining that home. But if they have already moved in with you, this requirement is easily met.

Maximizing Caregiver Tax Deductions and Credits

Once you establish your parent as a dependent, several dependent care tax benefits become available to help soften the financial impact of caregiving.

The Credit for Other Dependents

While the well-known Child Tax Credit gets most of the attention, caregivers of adult relatives have their own version. The Credit for Other Dependents allows you to claim a non-refundable tax credit of up to $500 for a qualifying parent. Because it is a credit rather than a deduction, it reduces your actual tax bill dollar-for-dollar.

The Child and Dependent Care Credit

Do you pay for adult day care, a home health aide, or a nurse so that you can go to work? The Child and Dependent Care Credit isn’t just for toddlers. If your dependent parent is physically or mentally incapable of self-care and lives with you for more than half the year, you can claim this credit for their care expenses.

For the 2025 tax year, you can claim a percentage of up to $3,000 in care expenses for one dependent, or $6,000 for two or more. The exact percentage you can claim (usually between 20% and 35%) depends on your adjusted gross income. To qualify, the care must be explicitly required so that you (and your spouse, if married) can work or actively look for work.

Dependent Care Flexible Spending Accounts (FSAs)

If your employer offers a Dependent Care FSA, you can funnel pre-tax money directly from your paycheck into an account used to pay for your parent’s qualifying care expenses. For 2025, the IRS limit for a Dependent Care FSA is $5,000 per household. Under new tax legislation taking effect in 2026, this limit jumps significantly to $7,500 for families.

Using an FSA lowers your taxable income immediately. Just remember that the IRS prohibits “double-dipping”—you cannot use FSA funds to pay for an expense and then use that same expense to claim the Child and Dependent Care Credit.

Deducting Mom or Dad’s Medical Expenses

Healthcare costs are often the heaviest financial burden of multigenerational living taxes. If you itemize your deductions rather than taking the standard deduction, the IRS allows you to deduct qualifying, unreimbursed medical expenses that exceed 7.5% of your Adjusted Gross Income (AGI).

If your parent qualifies as your dependent, you can lump their out-of-pocket medical expenses in with your own. For a taxpayer with a $100,000 AGI, only medical expenses exceeding $7,500 are deductible. Combining your parent’s prescription costs, copays, hearing aids, dental work, and mobility equipment with your own family’s medical bills makes it much easier to clear that 7.5% threshold.

“The biggest mistake families make when a parent moves in is waiting until tax season to understand the rules. By then, you’ve missed a year’s worth of record-keeping and tax-advantaged strategies.” — Ed Slott, CPA and Retirement Tax Expert

What Can Go Wrong: Tax Mistakes to Avoid

Navigating the tax code while managing family dynamics is tricky. Here are the most common pitfalls taxpayers face when a parent moves in:

• Misunderstanding the Social Security Trap: Families often assume that because a parent’s Social Security isn’t taxable, it doesn’t matter for tax purposes. While it doesn’t count toward the Gross Income Test, every dollar of Social Security that your parent spends on their own lodging, food, or care does count toward the Support Test. If they spend heavily from their own accounts, you may lose the right to claim them as a dependent.
• Ignoring the Multiple Support Agreement: If you and your siblings share the cost of supporting your parent, but no single person provides more than 50%, you can still claim them. You must use IRS Form 2120 (Multiple Support Declaration). The siblings must agree on who gets the exemption each year; you cannot all claim the same parent.
• Losing Track of Mileage: Transportation to and from medical treatments is a deductible medical expense. For 2025, the IRS medical mileage rate applies. Keep a log of every time you drive your parent to a specialist, physical therapy, or the pharmacy.

When to Consult a Professional

While basic dependency rules are straightforward, the financial realities of senior care rarely are. You should strongly consider hiring a certified public accountant (CPA) or a tax-focused financial planner if:

• Your parent is drawing from taxable retirement accounts (like traditional IRAs), which complicates the gross income test.
• You are sharing caregiving expenses with siblings and need to execute a Multiple Support Declaration.
• You are paying out-of-pocket for expensive in-home nursing care or making structural modifications to your home (like adding a wheelchair ramp or a walk-in tub), which may qualify as deductible medical expenses.
• You are managing your parent’s transition onto Medicaid, as tax strategies and Medicaid asset-protection rules frequently collide.

To deepen your understanding of these rules, reviewing official guidance is essential. The Internal Revenue Service provides comprehensive details in Publication 501 (Dependents, Standard Deduction, and Filing Information) and Publication 502 (Medical and Dental Expenses). For questions regarding how Medicare interacts with out-of-pocket costs, Medicare.gov is your best resource, while the Administration for Community Living (ACL) offers excellent support frameworks for caregivers navigating these transitions.

Moving a parent into your home is an act of deep compassion. By proactively managing the tax implications, you ensure that you are protecting your own financial future while providing them with the comfort and security they deserve. Keep meticulous records, communicate openly with any siblings involved in the care plan, and don’t leave valuable tax benefits on the table.

This is educational content based on general retirement planning principles. Individual results vary based on your situation. Always verify current benefit amounts, tax laws, and eligibility with official sources.

Last updated: February 2026. Retirement benefits, tax laws, and healthcare costs change frequently—verify current details with official sources.