There is not a federal caregiver tax credit, however, there are different deductions and credits available for those taking care of Qualifying Relatives. Are you paid by the government to take care of your sister? If so,, it is possible that the income is not taxable income. In order for the income to not be taxable under the Medicare waiver program you would have to provide care for her in the home where you live to qualify and claim her as a dependent. In general, when this applies, when you receive your W-2, box 1 will be blank and the income will not be taxable. If you are not being paid under a waiver program, then if she does live with you and you support her you may be able to claim her as a dependent on your return.
If you are asking about a state credit, which state do you live in as every state has different rules?
To claim someone as a Qualifying Relative, they must be:
- Your child ( including step children, adoptive children and foster children) or a descendent of them
- Your sibling (including half siblings) or a child of your sibling or a sibling-in-law
- Your parent or grandparents, including step parents and in laws
- Any other person that lived with you for the entire tax year
- Not a qualifying child of another taxpayer
- Someone that you provided over half of their support for during the tax year
- Has less than $5,050 in income (not counting social security)
If so, it is possible that you can claim her as a dependent on your return. If you do, and if you have total itemized expenses that are greater than your Standard deduction, you could claim her medical expenses as part of your itemized expenses. For her to qualify as your dependent the following would have to apply:
- She could not have income of more than $5,050 in 2024. Social security does not count
- She could not file a joint return for the year
You may also be able to file as Head of Household, if you are claiming your sister. This would increase your standard deduction from $14,600 (if you are single) to $21,900.
To file as Head of Household, you must meet the following:
- Be unmarried or considered unmarried on the last day of the year or have lived apart from your spouse for the last 6 months of the year
- Paid more than half the cost of upkeep of the home where the dependent lived (if it is a parent or child they do not have to live with you)
Itemized expenses include mortgage interest, gambling losses up to winnings, charitable contributions, state and local taxes up to $10,000, medical expenses in excess of 7.5% of your AGI and casualty and losses in excess of 10% of you AGI with the first $100 not counting towards the loss. Health insurance and all medical expenses are only deductible for the amount that is over 7.5% of your AGI. This means if her AGI is $50,000, then the amount that is over $3,750 is deductible.
Then your total itemized expenses would need to be greater than your standard deduction below in order to benefit from your expenses.
The 2024 Standard Deductions are as follows:
- Married Filing Joint (MFJ) $29,200
- Married Filing Separate (MFS) $14,600
- Head of Household (HOH) $21,900
- Single $14,600
If you have an additional job, outside of taking care of your sister and she is claimed as a dependent on your return, it is possible that you could claim the Child and Dependent Care Credit.
Standard versus Itemized Deduction
Taxes for Caregivers
Tax Credits for Disabled Dependents
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