If certain criteria are met, a taxpayer can claim a parent as a dependent on their tax return. If the taxpayer files as head of household they can claim the parent if they pay more than half the cost of keeping them in a nursing home or an assisted living home.
The parents reduced their taxable income by $3,650 by claiming their parent as a dependent on their tax return. Since the parents income was taxed at the 30% tax bracket, the income reduction may decrease their income taxes by $1,095 ($3,650 x 30%).
If you are in a combined (federal, self-employment, and state) tax bracket of 30%, you could reduce your taxes up to $300 for every $1,000 of income reduction by claiming your parent as a dependent on your tax return.