Will the US implement a caregiver tax credit? Experts explain

Millions of Americans provide unpaid care to aging and sick families, which is at a cost to them.

“Family caregivers spend an average of more than a quarter of their income to provide that care,” said Javier Palomarez, founder and CEO of The. Hispanic Business Council of America. “We are considering a sustained rise in healthcare. costthis will only increase for sure. ”

learn more: Earn income tax credits for IRS Update 2025 – Increased number of families eligible for higher credits

To reduce the financial burden, lawmakers Compassionate legal creditsa bill that provides tax relief to eligible family caregivers. Experts say Credits may provide meaningful support -But its future is not certain.

This proposal would give caregivers a financial break at out-of-pocket costs.

“Comfortable Law Credit proposes a tax credit of up to $5,000 per year, with 30% of such costs exceeding $2,000,” explained Annette Nellen, a certified public accountant (CPA), lawyer and tax professor. San Jose State University. “So if someone costs under $2,000, there’s no credit.”

To qualify, it must be paid by a “qualified caregiver” who pays “qualified fees” to “qualified caregiver.” The taxpayer claiming credit must have earned more than $7,500. ”

Nellen also acknowledges that it targets middle-to-low-income individuals who pay these costs.

“If the revised AGI exceeds $75,000 ($150,000 for couples), the credits begin to be deprecated,” she explained.

Armine Alajian, CPA and Founder Aradian Groupadded a context to what counts as a qualifying expense. “These costs include day care for adults, home improvements such as safe railings, and payments from home health aides.”

Check out: America Opportunity Tax Credit – What is it and who qualifies?

“The tax credit provides immediate relief to an estimated 53 million Americans who are currently acting as unpaid family caregivers, and provides an economic lifeline for those who have spent time and money caring for others,” Palomales said.

Shane Lukado, founder and CEO of InPerSuithighlights the possibility of financial relief. “As many caregivers spend more than $7,000 each year on services such as home health care and medical supplies, tax credits could ease some of that financial pressure.”

Lukado also sees wider economic benefits.

“This credit will reduce the financial burden on caregivers and lead to increased labor participation from those who need to quit their jobs to provide care to their families,” he added. “Loss of workplace productivity can be reduced as employees balance work responsibilities with caregiving tasks.”

Palomales agrees that credits can also improve the quality of care.

“Tax credits allow family caregivers to invest in high-quality equipment, medications and surgeries,” he said.

The bill’s support is strong, but progress is slower.

“This bill is something AARP has been trying to make a reality for over a decade and is one of the few issues that have bipartisan support among lawmakers and the public,” Aradian said. “But nonetheless, there is no guarantee that a similar version of the bill was not released from the committee last year.”

Even if the bill becomes law, experts will point to its limits.

“A tax credit of up to $5,000 can be a useful amount,” Aradian said. “Sadly, many people are forced to limit or even quit jobs when caregivers become full-time jobs on their own, so it’s far from what they need to pay for leaving their careers.”

Neren raises another concern: the difficulty of navigating tax-based aid.

“The complexity of definitions, records management and calculations leads to the question of whether providing this financial aid through tax law is the best approach,” Nellen said. “Alternatives include providing direct support to ‘qualified care recipients’ and providing more resources for care (e.g. care facilities, visiting nurses). ”

The future of the bill is still unknown.

“Turning this tax credit into law will create challenges as we have to weigh the costs of deployment against expected revenue reductions,” Lukado said. “The federal government must find ways to pay this credit while avoiding the major impact on current social programs and the growth of deficits.”

In other words, Congress should find money to fund credits without cutting back on other programs or increasing national debt.

Still, with the growing population of unpaid caregivers and rising healthcare costs, experts agree that the need is real, even if the solution is complex.

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