New ‘Credit for Caring Act’ Offers Tax Credit for Caregivers

New legislation introduced by a cross-party group of House Representatives and U.S. Senators could potentially change the lives of millions of caregivers. The “Credit for Caring Act” aims to reimburse family carers with up to $5,000 in federal tax credits. This credit would extend to cover 30% of qualifying expenses over $2,000, a move which is being praised by many.

The Backbone of Care

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Millions of people in the U.S. take on the job of carer, giving their loved ones priceless support, frequently at great personal cost. 

Magnitude of Care

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AARP estimates that almost 50 million Americans are currently working as carers across the U.S. They help out with a variety of jobs for their clients – everything from helping with everyday chores to personal care and nursing care.

Carers help their clients live as full a life as possible, often providing comfort and friendship to those left vulnerable.

Unpaid Contributions

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The majority of these carers (61%) balance other jobs and careers on top of their caregiving duty – typically with no extra money.

Estimates indicate that unpaid care work amounts to over $600 billion annually, and experts state that these silent workers form the backbone of the U.S. care system.

Juggling Responsibilities

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AARP figures show that in 2021 alone, these unpaid guardians incurred out-of-pocket expenses of a massive $7,242.

The financial load that they bear is significant and has been the impetus behind the “Credit for Caring Act” act.

Tax Relief Initiative

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In order to be eligible for the tax credit, carers would need to provide documentation of any expenses that exceed $2,000.

Crucially, the expenses had to be met by the carer applying for the credit rather than by the family member receiving care.

Economic Impact

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The potential impact of the measure goes beyond the caregiving community; forecasts suggest that it will have a favorable effect on the U.S. economy. 

A $1.7 Trillion Bonus

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According to an AARP estimate, supporting carers 50 years of age and older at work might add an extra $1.7 trillion to the US GDP by 2030.

This economic stimulus highlights the relationship between providing care and overall economic well-being.

Bipartisan Efforts

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Leading this legislative endeavor are Senators Shelley Capito (R) of West Virginia and Michael Bennet (D) of Colorado, as well as Representatives Mike Carey (R) of Ohio and Linda Sánchez (D) of California in the House of Representatives.

Their cross-party cooperation shows how broad support is for addressing the challenges faced by family caregivers across the nation.

Personal Advocacy

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In light of her own experience as the daughter of parents with Alzheimer’s, Representative Linda Sánchez emphasized the bill’s ability to lessen the “great burden on many families across the country.”

Federal Commitment

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Megan O’Reilly of AARP emphasized how conversations on caregiving are gaining traction at the local and federal levels.

The Biden administration’s recent executive actions and Medicare’s support demonstrate a dedication to attending to carers’ needs and acknowledging their crucial position in the country’s long-term care system.

Growing Recognition

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The “Credit for Caring Act” is a viable answer to the financial hardships that family carers experience, potentially alleviating some of the difficulties they encounter.

The bill’s timing seems appropriate given the expanding national conversation about caregiving and the growing awareness of its importance to society.

Demographic Trends

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The need for caregiving is anticipated to increase as the United States struggles with an aging population.

Bill Sweeney of AARP highlighted how the long-term care situation is getting worse, pointing out that “more and more people turn 65 every single day.”

This proposed law may be essential to helping carers and improving the nation’s capacity to handle this demographic transition.

Employment Challenges

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However, not every population is affected by caregiving in the same way financially.

Most family caregivers work full or part-time; however, their caregiving responsibilities may impact their employment, career prospects, and retirement benefits.

Financial Struggles

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According to AARP research, almost half of the carers have seen debt build up, and their savings have decreased drastically.

42% of carers stated that in order to devote more time to their caregiving duties, they either quit their jobs or cut back on their working hours.

Racial Disparities

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AARP’s research further reveals families of color confront disproportionate difficulties, with Latino or Hispanic family carers expected to spend 47% of their income on caregiving costs in 2021.

Asian and Pacific Islander carers spent 22% of their income, compared to 34% for Black families.

Inclusive Support

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The proposed legislation not only aims to address the financial strains on caregivers but also acknowledges the unique challenges faced by caregivers from diverse backgrounds. 

Timeline for Implementation

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Potentially becoming law before the start of the 2024 income tax year, the “Credit for Caring Act” could mark a significant step toward recognizing and supporting the invaluable contributions of caregivers across the nation. 

The Promise of Critical Relief

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Nancy A. LeaMond, AARP’s executive vice president, emphasized that passing this legislation in 2024 is crucial to “provide relief and put money back in the pockets of caregivers” who form the backbone of the country’s long-term care system.

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The content of this article is for informational purposes only and does not constitute or replace professional financial advice.

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