Home Care Tax Deductible? What You Need to Know
Home Care Tax Deductible? What You Need to Know
Caring for a loved one at home is a great option, but it can be costly. The good news is that some home care expenses may be tax deductible. Here’s what you need to know about what qualifies for tax deductions and how to maximize your savings.
What is "Home Care" for Tax Purposes?
There are two types of home care:
- Home Care: Non-medical assistance like help with daily activities, bathing, dressing, or meal preparation.
- Home Health Care: Skilled medical services like nursing or physical therapy.
For tax purposes, only medically necessary home care services are deductible.
Is Home Care Tax Deductible?
The IRS allows you to deduct certain medical home care expenses, but non-medical services (like companionship or housekeeping) are not deductible. To qualify for deductions:
- Doctor’s Certification: A doctor must confirm that the person needs assistance with at least two activities of daily living (ADLs) or requires supervision due to cognitive impairment.
- Medically Necessary Services: Tasks like bathing, dressing, and eating are deductible if they’re prescribed by a doctor.
What Services Are Not Deductible?
- Companionship
- Meal preparation
- Laundry or light housekeeping
- Running errands
Keep a detailed record of the tasks your caregiver performs to ensure you’re only deducting eligible expenses.
How to Track Your Home Care Expenses
Track time spent on medical vs. non-medical tasks. For example, if your caregiver works 8 hours a day, and only 2 hours are spent on ADLs, only 25% of the costs are deductible.
Is Home Health Care Tax Deductible?
Yes, home health care services like nursing or physical therapy are deductible if prescribed by a doctor. Track time spent on medical tasks to ensure accuracy.
Who Can Claim Home Care Deductions?
If you paid for the services, you can claim deductions. You can also claim expenses for a qualifying relative (parents, siblings, in-laws, or anyone living with you and for whom you provide more than half of their support).
How to Calculate Your Deductions
You can only claim medical expenses that exceed 7.5% of your adjusted gross income (AGI). For example, if you spent $28,000 on medically necessary home care and your AGI is $100,000, you can deduct $20,500 ($28,000 - $7,500).
Other Ways to Save on Home Care Costs
Explore options like Medicaid, long-term care insurance, or private savings to reduce home care costs.
While home care tax deductions can be confusing, it’s worth understanding what qualifies. Keep track of your expenses, consult a tax professional, and explore all available resources to ease the financial burden of home care
