What can you do when your parents are struggling to pay medical bills and your kids can't land jobs? Why, write checks, of course!
Being surrounded by loved ones can be a costly proposition. Much has been made of the recession's effect on recent college graduates; they're pouring lattes and surfing sofas. And aging parents can run through money at rates that would challenge Donald Trump's next wife.
But here's the good news: There are some tasty tax breaks for the Sandwich Generation who are helping family members through tough times. That kid on the couch could save you almost $6,000 in taxes, according to sample calculations performed for Reuters by the Tax Institute at H&R Block. The potential savings for supporting an aging parent are even greater.
Here's how the tax code can help you take care of everybody:
Once your mother is a dependent, all of her medical expenses become yours, for the purpose of deducting them on your tax return. If that same $120,000 couple had a dependent parent with $40,000 in medical expenses (easy to do if she lives in an assisted living facility or nursing home), the family's tax bill would be $5,499, says Block's tax institute. That's a savings of $8,870. And if they are taking care of Grandma AND have that boomerang kid on the couch, their tax bill would fall all the way to $1,201, saving them $13,168. That ought to cover the therapy bills nicely.
