Increasing numbers of grandparents are becoming primary caregivers to their grandchildren, a new role. Many have found raising grandchildren can lead to financial challenges.

Don’t Take On New Debt

Because many grandparents are in their 50s or older, it’s important to avoid taking on new, large debts or willingly sacrificing retirement savings plans—there’s not enough time to recover from major financial setbacks. Legal fees, child care costs, and housing demands can be overwhelming. To make ends meet and stay on track, experts urge custodial grandparents to accept assistance if it’s available.

Programs That Can Help

Assistance can come in many forms—grants, child care, and food stamps are a few of the ways government and private programs help custodial grandparents. Exactly what grand-families will qualify for depends mainly on:

* The form of custody arrangement
* Income and assets
* The state of residence

Tax Breaks?

A number of tax breaks also can leave more money in caregivers’ pockets. To claim most tax benefits, grandparents must qualify under Internal Revenue Service (IRS) rules. That generally requires that grandparents and grandchildren meet the definitions of a primary caregiver and a dependent, neither your income nor the children’s exceeds the limits, and no one else comes forward claiming the child as a dependent.

Check the IRS website at for information about items that can help such as the Child Tax Credit, Dependent Exemption, Earned Income Credit, Child and Dependent Care Credit, Change in Filing Status, and tax breaks for education.

Taking steps to reduce money-related stress can allow grandparents to savor their new role as caregiver, even if raising a second family was never part of their original retirement plan.