newjerseynewsroom.com

BY CAROL ABAYA

NEWJERSEYNEWSROOM.COM

THE SANDWICH GENERATION

Unusual income tax deductions: The cost of certain home care chores done for elders living at home may be deductible from either the elder's or sandwich generation's income taxes.

With a new year upon us, caregivers should track costs now for 2011taxes. Or, if you have bills and/or checks for 2010, you can include these costs in your 2010 taxes.

A family can deduct — either from the elder's income or the sandwich generation's income — part of a paid caregiver's salary if the chores fall under medical or ADL categories. ADLs are activities of daily living and include bathing, dressing, transferring, eating and toileting. Cooking, shopping and house cleaning are not deductible. If there is a live-in or part-time housekeeper or caregiver, a percentage of her salary can be considered a deductible expense.

Medical elements include: medication supervision and delivery; diabetic testing and shots; wound care; care related to accidents, surgeries, or body parts replacement, and physical and occupation therapy not paid for by insurance, or care as a result of dementia.

Also, if an adult child, sandwich generationer or baby boomer takes care of a parent's finances and/or investments, then he/she can claim a "financial services" fee. This fee can be deducted from the elder's income, but must be reported as income by the caregiver.

In one case — using care deductibles and finance help costs — the elder's tax obligation was reduced from $35,000 a year to under $10,000.

The Sandwich Generation is reader interactive, and questions are welcome.
Contact Carol Abaya via her web site www.sandwichgeneration.com or e-mail
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