Why Family Caregivers Should Keep Financial Records

Last Updated: September 2, 2019

Caregiving typically does not happen in one singular moment; instead, it often gradually develops over time. You may begin by helping your parent or senior loved one with small errands, like picking up groceries or driving to doctor appointments. You are acting out of love and make the time to help as much as you can.

At some point, however, you may realize that the role is taking more and more of your time, energy, and, sometimes, finances. It may be time to formalize the arrangement, if only in your mindset, and begin saving documentation of your work as a true caregiver.

The reasons for doing so can benefit both you and your loved one, as shown below:

1. Claiming the caregiver tax credit.

By collecting evidence of your own finances spent in supporting your care recipient – from the gas used in transporting them, to groceries purchased, to prescriptions picked up – you may eventually spend enough of your own money to be able to claim them as a dependent, even if they are not living with you full time. Bring your documentation to a meeting with your certified public accountant (CPA) when filing taxes, or better yet, contact them ahead of time to see if the caregiver tax credit might be a possibility for you. Rather than scrambling to reconstruct what amount of your money was spent in caregiving at the end of the year, file all applicable receipts and records away for easy reference when the time comes.

2. Defending yourself from questioning family members.

Unfortunately, you may also need documentation of how you are helping your parent or senior loved one for your protection if you are ever questioned by other family members or even your loved one.  For example, you may have a fairly informal working system set up with your loved one, where he or she writes you a check to reimburse you for groceries or medications; if this ever comes into question by a well-meaning family member or friend, it’s helpful to have receipts that match up with checks to calmly prove how that money was spent. Sadly, your actions might be questioned, especially if you have voluntarily become the primary caregiver, but money can bring out the worst in people. Having proof of all transactions helps facilitate calm, factual discourse.

3. Protecting yourself from claims.

In the same way, if your parent or senior loved one suffers from dementia, there may be a time when he or she accuses you of stealing. Fraud against elders is sadly a very real occurrence, and your loved one may suffer from paranoia brought on by the disease. In this case, it’s helpful to be able to calmly show them the evidence of where their money went, using receipts and a carefully maintained checkbook record. If you help by paying bills for your loved one, you might invite them to sit with you while you write out the bills, even allowing them to put them in the envelope and put on the stamp. You can also leverage your loved one’s bank technology – like checking balance over the phone or online – to help reassure them that their money is still where they left it. Patience is key in these conversations, especially when facing memory loss and personality changes associated with Alzheimer’s disease or dementia.

4. Qualifying for Medicaid.

For example, if your care recipient needs to enroll in Medicaid, they must submit work to a five-year “look back” for all of their financial records. If Dad or Mom have been giving you a check each month to buy their groceries – and you have not documented this exchange by saving the receipts – a government entity might suggest that they were giving away their finances in small chunks to qualify for Medicaid, which is, of course, forbidden. By saving your receipts and stubs, you can easily prove how all money given to you was spent and show that it was used to support your loved one.

It can be extremely helpful for caregivers to record, save, and be transparent in all financial activities, in order to leave no room for any questions. In the long run, this will save you energy and time that could be better spent caring for your loved one.