Here’s a reminder if you help care for an elderly parent or grandparent: You may be able to take a dependency exemption if you meet certain tests. Your parent or grandparent needn’t live with you to qualify as a dependent. But your relative’s income from taxable sources for 2016 must be less than $4,050, and you must show that you provided more than half of the person’s total support.
The rules to qualify for the dependent care credit are more stringent. The $4,050 income test doesn’t apply, but your relative needs to have lived with you for more than six months during the year and be unable to care for him- or herself. Other rules for the credit need also be met. For example, expenses for the care must be incurred so you can work, and you must report the provider’s tax ID number.