General Expenses

• There is no tax deduction available for the general living expenses of yourself or your parents. These expenses include food, housing payments, utility bills and transportation costs. These payments will be considered a financial gift to your parents and will never create a tax deduction. If you assist your parents with their general living expenses, you must provide this support without any tax assistance.
  
  

Dependency Exemption

• If you provide the majority of your parents' financial support and they have almost no other income, they may qualify as dependents on your tax return. For your parents to be eligible as dependents, their annual income must be less than $3,700 each, $7,400 total. You must also contribute over half of their support per year. If you and your parents meet these qualifications, they can be claimed as dependents on your taxes. You may deduct $3,700 per parent, $7,400 for both, from your taxes as additional dependency exemptions.
  
  

Medical Expenses

• While the majority of your parent's living expenses cannot be deducted, you may be eligible to write-off some of their medical expenses. If you provide over half of your parents' financial support, you can claim them as medical dependents. There is no cap on their annual earnings for medical dependent eligibility. If you parents qualify as medical dependents, you are allowed to deduct any of your parents' medical expenses that exceed 7.5 percent of your adjusted gross income for the year.
  
  

Dependent Care Credit

• If your parents require full-time care, you can deduct these expenses using the dependent care credit. To claim this credit, you and your spouse must both be working or studying full-time and the dependent care of your parents is interfering with your jobs. If you qualify, you can claim a tax credit for the costs of providing dependent care for your parents. You can deduct up to $3,000 a year for the expenses of one parent and $6,000 for the expenses of two parents from your taxes.