What can you do ahead of time to help ease the financial burden of caring for your aging parents?
Look into potential tax breaks.
As noted in a recent article in Oprah Magazine, titled “Sanity-Saving Secrets For Caring For Your Aging Parents,” an elderly parent may be claimed as a dependent if their annual income is less than $3,900 and you provide more than 50 percent of their financial support. Their medical expenses may also be deductible.
If you’re a full-time caregiver, don't use your 401(k) or IRA for living expenses.
There’s a 10 percent penalty for an early withdrawal. The original article also advises to do whatever you can to keep your day job, even on a modified schedule. If your employer isn't helpful, you may be eligible for up to 12 weeks of unpaid time off through the Family and Medical Leave Act, allowing you time to make other arrangements.
If you have to quit work or go part-time, talk to your siblings and other family members about reimbursement for your services.
Once you have analyzed what you stand to lose in lost wages, then negotiating a salary needs to be a top priority. At a minimum, you should have enough for basic expenses, including housing, food, insurance, and IRA contributions. If your parents are footing these bills, speak with a qualified and experienced elder law attorney to make sure you're not jeopardizing your parents’ Medicaid eligibility. Ask for a salary that offers you financial stability and peace of mind, both of which are critical for every caregiver.
Naturally, you should not approach this important responsibility without consulting an experienced elder law attorney.
Reference: The Oprah Magazine (December 19, 2014) “Sanity-Saving Secrets For Caring For Your Aging Parents”