Support for elderly parent

[TXSponger]

I have a sick, disabled, elderly parent with dementia and has very little remaining money. His only income is about $1,700/mo but his expenses are about to be about $6K/month. If I end up having to support the parent, I understand that I can personally get a tax deduction for the support (assuming any required criteria are met). But from a tax perspective, does the parent have to declare the support on his only taxes as a gift in excess of the allowable gift exemption? This would mean he is paying tax on the support and require me to fund a tax liability on top of the living expenses?

 

[LdiJ]

I have a sick, disabled, elderly parent with dementia and has very little remaining money. His only income is about $1,700/mo but his expenses are about to be about $6K/month. If I end up having to support the parent, I understand that I can personally get a tax deduction for the support (assuming any required criteria are met). But from a tax perspective, does the parent have to declare the support on his only taxes as a gift in excess of the allowable gift exemption? This would mean he is paying tax on the support and require me to fund a tax liability on top of the living expenses?

Supporting an elderly/dependent parent is not considered to be a gift. However, the receiver of a gift is never responsible for any taxes on that gift. The giver of a gift has to file a gift tax return for gifts in excess of 15k per person, with no gift tax due unless the person has exceeded their lifetime level of gifting approx 11 million dollars (subject to change). Therefore, it is highly unlikely that your support of your elderly parent will end up causing you to owe any tax.

If the 6k a month is going to be nursing home fees for a memory care unit, then at least a significant portion of it will be deductible for you as a medical expense, but it is important that you pay the bill directly to the nursing home in order to get that deduction.

 

[Taxing Matters]

But from a tax perspective, does the parent have to declare the support on his only taxes as a gift in excess of the allowable gift exemption?

No, he would not need to report or pay tax for the support you provide. Much of the support that you provide may not count as gifts that reduce your gift tax exemption either, especially health bills you pay for him directly to the medical provider. But do check to make sure you understand the impact of what you give on whatever benefits he's getting. You don't want to end up reducing those benefits unless absolutely necessary.