Tax credit up to $5,000 being considered for family caregivers

Senior woman
Posted at 5:00 AM, Jul 13, 2021
and last updated 2021-07-13 05:52:50-04

NORFOLK, Va. - A bill being considered by Congress could give family caregivers some relief from the overwhelming costs.

The bi-partisan Credit for Caring Act would provide a tax credit of up to $5,000.

There are currently about 48 million people in the U.S. who care for either a family member or friend.

AARP looked into the financial strain in a recent survey. Here's what they found:

  • 78 percent of caregivers report spending their own money on caregiving expenses
  • Caregivers spend an average of $7,240 annually
  • 26 percent of their personal income goes to caregiving activities
  • Gen X (ages 41 - 56) caregivers report highest out-of-pocket costs
  • Gen Z (ages 6 - 24) and Millennials (ages 25 - 40) have the most financial strain

"If you go by age, those members of Gen X have paid the most out of pocket, just in sheer financial dollars around $8,500 a year, but it's for caregivers, those who are Millennials and people in Gen Z, for whom the out-of-pocket [expenses] represents a much bigger percentage of their income. It's a huge hit," said Jim Dau, Virginia State Director for AARP.

Dau says the strain is also higher for communities of color.

African American caregivers report spending about a third of their out-of-pocket income on caregiving.

It's almost half for members of the Hispanic and Latino community.

Dau says there are three steps caregivers should take to get their finances in order: get your financial house in order, make a management plan, and discuss end-of-life care preferences.

You can click here for a comprehensive planning guide from AARP.