Normally in our younger years, our parents can claim us as dependents and receive tax credits to decrease their federal and state income taxes. As we get older, some of our parents may become our dependents. The IRS recognizes that many adult children assume the day to day care and financial support for their parents as they age. To claim your parents as dependents on your income taxes they must meet all of the following criteria. This test must be met by each parent if you are going to claim both:

Ø  Be a U.S. citizen or a permanent resident;

Ø  Have a valid Social Security number;

Ø  Be your actual parent, either biologically or by adoption;

Ø  Not required to file a federal income return themselves.  Their income (other than Social Security) is less than $8,000.00 individually or $19,000.00 if Married Filing Joint.

Ø  They do not file a joint income tax return with your other parent (only applies if they are married);

Ø  They receive more than 50% of all financial support from you.

NOTE:  your parents do not have to live in your home with you they can live in their own home or in retirement community or nursing home.

How do I claim my parent(s) on my tax return?

Complete your Federal Income Tax Return as you normally would. Under the third section of the form, titled "Exemptions," list each of your parents' first and last names, Social Security numbers and relationship to you.

If you also pay for Adult Daycare you may be eligible for Daycare Credit

Depending upon your income you can get 20% to 35% paid up to a max of $3,000.00.  To claim the dependent care credit, you must complete Form 2441 and attach it to your Federal Income tax Return.

Is your tax preparer “Licensed” ??

§  Per IRS over 60% of tax preparers are NOT licensed

ü Tax Preparers 

§  CPA

§  Enrolled Agent – EA

§  Register Tax Return Preparer – RTRP

§  Unenrolled Tax Preparer

So what is the difference?

ü CPA – Licensed by state of Indiana, IL, KY….

§  Studies in College mostly around large corporate audit

§  Normally have had only three or so class in taxation.

ü Unenrolled /Unlicensed Tax Preparer.  Per IRS over 60% of all tax preparer are in this category, they do not have a license and in many cases do not have any formal education.

ü Register Tax Return Preparer – A simple open book test – these people are NOT tax experts

ü Enrolled Agents (EA’s) are Tax Professionals who are Experts in Taxation, who have passed Extensive Testing and have been granted privileges by federal government to prepare taxes and represent taxpayers before the Internal Revenue Service (IRS) including audits, collections and appeals.

Enrolled Agent is where you get your biggest bang for your buck.  Hire a Licensed Tax Expert Specialist.  To find an EA near you go to www.naea.org