Former first lady, Rosalynn Carter observed that “there are only four kinds of people in the world: those who have been caregivers, those who are currently caregivers, those who will be caregivers, and those who will need caregivers." It is estimated that there are more than 38 million unpaid family caregivers in the U.S. Many of them struggle financially because of the added burdens of caring for an incapacitated family member.
But now there is some financial relief available for Nebraska caregivers. Legislative Bill 937 which became law on January 1 of this year provides a nonrefundable tax credit of up to $3,000 to any family caregiver who incurs eligible expenditures for the care and support of an eligible family member in Nebraska. The credit amount is equal to 50% of uncompensated expenses directly related to the care of the family member incurred during the year. The credit amount is capped at $2,000, but if the family member being cared for has dementia or is a Veteran, the credit cap goes up to $3,000.
As you would expect there are qualifications for receiving the tax credit:
- Individuals must qualify as a dependent, spouse, parent, or other relation by blood or marriage to the family caregiver.
- Individuals must live in a private residential home—not an assisted living center, nursing facility, or residential care home.
- The family member receiving care from a caregiver must require assistance with at least two activities of daily living (ADLs), such as bathing or eating.
- To receive the credit, family caregivers must have a federally adjusted gross income of less than $50,000 for an individual or less than $100,000 for a married couple filing jointly.
The pool of money available for the credit is limited to $1.5 million annually for first two years, and then is capped at $2.5 million each year after that. Once those limits have been hit, the credit for that year will go away, so caregivers are urged to file early.
The Nebraska Department of Revenue (DOR) has been tasked to create the appropriate rules and forms for implementing the caregivers’ tax credit. If you are eligible for this tax credit, contact the DOR for instructions on how to apply.
Nebraska is now the second state to establish a caregiver tax credit. The new law is modeled after a similar one which went into effect in Oklahoma last year.
