Our annual income is 400k. We will now add one parent as a dependent, and this parent is a new immigrant with no annual income. I will purchase insurance for this parent at a premium of about 12000USD per year. My questions...
-Can I get a ballpark estimate by how much I will reduce my annual taxes by adding a new dependent?
-Can I itemize 12000USD health insurance premium as deductible?
Maybe $0
The maximum credit amount is $500 for each dependent who meets certain conditions. This credit can be claimed for:
Dependents who have Social Security numbers or Individual Taxpayer Identification numbers (if the parent doesn't get an ITIN or SSN you can't claim the parent despite the next sentence.
Dependent parents or other qualifying relatives supported by the taxpayer.
The credit begins to phase out for married couples filing a joint tax return at $400,000.
yes, you can deduct the medical insurance premium. However, with $400K in adjusted gross income
only medical expenses in excess of $30K (7.5% of AGI) would be deductible. In addition, your total itemized deductions must exceed the standard deduction of $27,700 for joint filers.
@main0stage is your parent considered a resident alien or non-resident alien as of 12/31/23?
for 2023, unless they are considered a resident alien (passing the substantial presence test), I do not beleive you claim claim them as a qualifying relative in 2023...And therefore can't deduct the medical premiums in any event.