Home Care Tax Deductions:Understanding New Tax Benefits for Senior Care

By Stacy Lee, 9:27 am on
Home Care Tax Deductions

If you or your family currently have a loved one receiving home care services, or you will soon, it is important to understand how you can use home care tax deductions to your family’s benefit.

But first, a disclaimer: Home Care Assistance does not officially offer tax advice. We recommend that you seek the help of a professional.

Now, let’s dive into how it works.

The IRS allows family caregivers to claim individuals related by blood, marriage, or adoption – and even friends as dependents. Both parties must meet the IRS requirements. If they do, the caregiver can claim the dependent and the credit for other dependents on his or her federal tax return.

As proof of adding a dependent, remember to keep detailed records of all the costs associated with caring for your senior. This may require creating a log to show that the dependent lived with you for at least six months. Additionally, keeping track of all receipts and note all related expenses. Maintaining a log will make sure that you don’t miss any allowable deductions, and it will be part of your documentation if you are audited.

For a single taxpayer or a married taxpayer that does not live with their spouse for the second half of the year, adding a dependent who is related to you and lives with you changes your filing status to head of household. The change in status means your standard deduction will increase.

Understanding the special rule for parents: you can claim your parent as a dependent and receive the “head of household” status even though he or she does not live with you. All other relatives must live with you for at least six months to receive the head of household status.

Additionally, deductions can be made for the money that you paid to cover your loved one’s medical costs that are not reimbursable. When filing your yearly taxes, it is a good idea to have a professional prepare or review your tax return before finalizing the details.

Below is a list of the allowable deductions:

  • Copays and deductibles
  • Acceptable therapies not covered by insurance
  • Eyeglasses
  • Physical therapy
  • Bandages
  • Hearing aids
  • Assisted living charges for medical reasons
  • Prescribed medicines and equipment
  • Insulin
  • Transportation to appointments or services
  • In-home health care worker, if you are working
  • Activities for older people with special needs
  • Home and vehicle modifications needed for safety or mobility

Caring for a senior loved comes with great responsibility. Understanding all of the available benefits and tax breaks will help ease some of the financial burdens families often experience.

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