Answer

Hi again Brenda

Unfortunately, there are no tax breaks in so far as what income will be taxed. Your wages, annuity distribution, bank interest, etc will still be taxed at your graduated tax rate.

There are some other things that might help though:

You may deduct on your Form 1040 (Schedules A)Itemized Deductions as a medical expense costs related to special equipment such as motorized wheelchairs, hand controls on a car, in addition to doctor bills, prescription medicine, etc.

Certain home improvements removing structural barriers to accommodate a disabled person may also be deducted as medical expenses. Such costs include entrance and exit ramps, widened doorways, lowered kitchen equipment and cabinets, and modifications to bathrooms. The full cost of such structural improvements, regardless of whether or not they increase the home’s value, are added to other medical expenses and the total is deductible to the extent that it exceeds 7.5 percent of AGI.

In order to lower your taxable income this year, you might want to consider rolling your annuity into an IRA. Not all annuities may be rolled however, only those that are "qualified anuuities", meaning they are pre-tax dollars. You will want to check with your employer to verify that your annuity is eligible to be rolled. Although this will have the immediate effect of lowering your taxable income, thus lowering your 7.5% ceiling for claiming the medical expenses above, there is a catch to this however. You must wait until you are at least 59 1/2 before you take a distribution, otherwise that distribution will have a 10% penalty attached to it. Since you stated you would be 58 1/2 when you retire and take your annuity, this would mean you would only have to wait a year before you could draw the money out penalty free.

There's also another reason to roll this money into an IRA and keep it out of your taxable income. KY does not tax the first $41,110 of pension/IRA income. ($41, 110 was the 2008 figure, I've not seen a figure for 2009).

I wish there were more tax breaks for people such as yourself who give good quality care to their loved ones, but I hope that at least one of the suggestions above will help you.

Best of luck to you.