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unpaid family caregivers in US

Alzheimer’s Disease caregivers that die before their loved one

caregivers who report care as a heavy burden

This is an important topic for the 53 million family caregivers who are absorbing the high cost of care.  We know that caregiving is financially challenging to cover the expensive long-term care that most of us will need as we age.  You see, we know live with an average of two to four chronic health conditions that may impact our daily activities and make us vulnerable to injury but not acutely ill enough to require hospital care. People are surprised to learn that Medicare does not cover these expenses, and few people have private long-term care insurance or a fat piggy bank to pay for care. Today, Medicaid is the primary payer of Long-term service and support, covering just over half of all spending for such services and supports in the nation. However, access is limited to Medicaid Home and community-based  services.  Family caregivers to continue to provide care, and most people receiving support from family caregivers do not meet the financial eligibility requirements for public assistance. Which is why this discussion on state and federal tax credits are important.

First, let’s talk about which states have the best long-term service and support programs overall according to the AARP LTSS score card.   Only five states (Colorado, District of Columbia, Minnesota, Washington, Massachusetts) consistently scored high enough across all the indicators to reach the top tier of performance criteria for the best long-term  service and support which includes Affordability and Access, Choice of Setting and Provide, Safety and Quality, Support for Family Caregivers, and Community Integration.

These five criteria, in a perfect world, combined will be a system the serves all people regardless of culture, location, and socioeconomic circumstances. However, we can’t wait for the perfect system and the ones we have today are convoluted and frustrating.  We know that families are using private companies for home care and buying supplies at local stores because they do not qualify for needs-based services.  In fact, we know that local area agencies on aging contains an aging and disability resource center however most of us see their role as the providers of last resort.  That is why we started CreditforCaring.com.  An easy 24/7 free online resource to get answers fast.

Six states with tax credits for caregiving but each one is different.

1. Montana called Elderly Care Credit Benefit · 20% of the qualified costs 30% of the qualified costs minus 1% for each $2000 of income (rounded up) above $25,000.
2. North Dakota Family Member Care Credit The amount of credit is determined by eligible expenses incurred for caring for a family member. The caregiver can offset up to $4,000 in expenses with the credit, which is a percentage of income.
3. Missouri Caregiver must be registered with the state to be eligible for A shared care member registered with the Division of Senior and Disability Services, Missouri Department of Health and Senior Services, may be eligible for a tax credit equal to his or her Missouri tax liability or $500, whichever is less, to offset the cost of caring for an elderly person.
4. New Jersey Caregiver Assistance Act 22.5% of up to $3,000 in qualified care expenses paid or incurred by the caregiver. The maximum amount of each credit is $675 per year.
5. South Carolina  Family Caregiver Tax Credit. The reimbursement is one hundred dollars per month for each caregiving month in which the caregiver cannot work because of their responsibilities, and $50 per month where working is still possible.

6. North Carolina As of April 2024, North Carolina’s Child and Dependent Tax Credit (CDCTC) allows caregivers to claim up to $1,100 in tax credits for a percentage of care-related expenses. Caregivers may also be eligible for tax deductions for home care.

I write a blog every tax season on the Child and Dependent Care Tax Credit found in the IRS code. Quoting IRS  “The amount of the credit is a percentage of the amount of work-related expenses you paid to a care provider for the care of a qualifying individual. The percentage depends on your adjusted gross income.

The total expenses that you may use to calculate the credit may not be more than $3,000 (for one qualifying individual) or $6,000 (for two or more qualifying individuals). Expenses paid for the care of a qualifying individual are eligible expenses if the primary reason for paying the expense is to assure the individual’s well-being and protection.”

Keep great records including miles driven, food and non-consumable purchases for your loved one. It can be overwhelming, but this is the best way to recoup some of the funds paid for caregiving.   However, this is not money coming back to you, this is a credit to offset your taxes meaning people in lower tax brackets benefit less, unfortunately.

There are ten states that offer a refundable extension of federal child and dependent tax credit from the IRS.  The Child and Dependent Tax Credit program  varies by state.  Income levels determine the credit percentage is the most common model.

This first list are those that have refundable tax credits from state taxes. Before I list them, I want to qualify that this program is not the same as the Earned Income Tax Credit program that was popular during the pandemic.  This is an extension of the federal Child and Dependent Tax Credit program.

The states with refundable tax credits are: Iowa, Hawaii, Colorado, Louisiana, Maine, Minnesota, Nebraska, New Mexico, New York, and Vermont.

There are eleven states offer non-refundable tax credits for caregiving.  This means the benefit will reduce your tax liability but will not produce a tax refund include: California, Delaware, District of Columbia, Georgia, Kansas, Kentucky, Maryland, Ohio, Oklahoma, Oregon, and Rhode Island.

We need a change to the federal tax code that will give family caregivers any reasonable relief from the cost of caregiving.  The Credit for Caring Act of 2024
Introduced in House and Senate (01/31/2024)

Mike Carey of (R) Ohio is the sponsor with 23 cosponsors

Michael Bennett  (D) of Colorado is the Senate sponsor with five cosponsors

Credit for Caring Act of 2024

This bill allows an eligible caregiver a tax credit of up to $5,000 for 30% of the cost of long-term care expenses that exceed $2,000 in a taxable year. The bill defines eligible caregiver as an individual who has earned income for the taxable year in excess of $7,500 and pays or incurs expenses for providing care to a spouse or other dependent relative with long-term care needs.

“(3) GOODS, SERVICES, AND SUPPORTS.—For purposes of paragraph (1), goods, services, and supports (as defined by the Secretary) shall include—

“(A) human assistance, supervision, cuing and standby assistance,

“(B) assistive technologies and devices (including remote health monitoring),

“(C) environmental modifications (including home modifications),

“(D) health maintenance tasks (such as medication management),

“(E) information,

“(F) transportation of the qualified care recipient,

“(G) non-health items (such as incontinence supplies), and

“(H) coordination of and services for people who live in their own home, a residential setting, or a nursing facility, as well as the cost of care in these or other locations.

We need this legislation to pass.  Our current president has committed to signing it.  Unpaid family caregivers save this nation more than the annual revenue of Walmart.  Or put another way, unpaid caregivers save the nation more than then national budget for Medicaid.