(South Bend, IN)- Today, Congressman Joe Donnelly announced his plan to introduce legislation that would provide tax relief to working Americans who are part of the “Sandwich Generation.” The Sandwich Generation is comprised of working Americans who are caregivers for children as well as aging parents.
“Right now, an estimated 16 million Americans find themselves “sandwiched” between two generations, struggling to raise their kids while also caring for an aging loved one,” Donnelly said. “In a society where both child and elder care costs fall on the shoulders of a single generation, we must do more to ensure that working Hoosier families are better able to balance the responsibilities of work and family.
Melissa Chalman, who would qualify for the tax credits proposed in Donnelly’s legislation, joined Donnelly for his announcement and shared the challenges she faces as a member of the Sandwich Generation.
“I am, in essence, the head of two households - plus working full time,” Mrs. Chalman said. “Now that I am often on ‘mom duty,’ running her to doctor visits, doing her grocery shopping, picking up prescriptions and paying her bills, we have needed child care at the boys' school more than before. Congressman Donnelly’s legislation would have a direct impact on our family.”
The Donnelly bill has two major components: First, it would expand the dependent care tax credit (DCTC) to allow more families to receive tax relief for the child and elder care expenses they must incur in order to work. Under the current law, the DCTC allows working families earning $15,000 a year to claim a credit on up to 35 percent of qualified care expenses for dependent children and/or adults. The credit is gradually reduced to 20 percent as a family’s income rises to $43,000 and above. The Donnelly bill would extend the DCTC to cover 35 percent of qualified expenses for families earning up to $75,000, with the credit phasing down to 20 percent for families making $100,000 or more.
“The current tax credit provides important relief to low-income families but it does little to alleviate the challenges faced by many other hard-working Americans,” Donnelly said. “It’s time we expand this tax relief to more Hoosier families who are trying to provide important care to dependent children and adults.”
Secondly, the bill would allow families to claim the DCTC on qualified care expenses paid on behalf of aging parents who do not live with the family. The current DCTC allows working families to claim qualified expenses incurred while caring for an aging parent only if the individual is living in the home. The Donnelly bill would allow families to claim the DCTC on behalf of aging parents or relatives not living with the family.
“It’s not an uncommon situation to be paying for the care of an aging adult, even if the adult lives elsewhere.” Donnelly said. “Expanding the definition of who qualifies as a dependent would make it easier for families to care for an aging adult, while allowing that individual to remain in a living situation more suited to his or her unique needs.”
A taxpayer can claim any household service or care expense that enables the taxpayer to work or look for work. Qualified expenses include day care, adult day care, nursery school, housekeeping, a home health aid, etc. A family may pay either a private individual or a dependent care center for dependent care. However, payments to a dependent care center are qualified expenses only if the center meets all applicable state and local laws and regulations. The credit does not cover medical expenses.
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