Tax season leads to some very common questions about in-home care.
Clients working with a private caregiver commonly ask about in-home care tax deductions during tax season. It makes sense, you want to take advantage of any deductions that are available to limit your tax burden.
So quick disclaimer, I am not a Tax Professional, I am a nurse. That’s why it is important to have a CPA or other tax professional to help you determine what is best for your situation. I use Jim ChouinardCPA both personally and for Abby Services. He is a CPA and a darn good one too.
Very often our senior care clients and their families ask if in-home care tax deductions are available. Like many things involving taxes and the government, a simple question can lead to a complex answer. This is the response from my tax professional which is straight from the IRS:
You can include in medical expenses wages and other amounts you pay for nursing services. The services need not be performed by a nurse as long as the services are of a kind generally performed by a nurse. This includes services connected with caring for the patient’s condition, such as giving medication or changing dressings, as well as bathing and grooming the patient. These services can be provided in your home or another care facility.
Generally, only the amount spent on nursing services is a medical expense. If the attendant also provides personal and household services, amounts paid to the attendant must be divided between the time spent performing household and personal services and the time spent for nursing services.
For example, because of your medical condition, you pay a visiting nurse $300 per week for medical and household services. She spends 10% of her time doing household services such as washing dishes and laundry. You can include only $270 per week as medical expenses. The $30 (10% × $300) allocated to household services can’t be included.
However, certain maintenance or personal care services provided for qualified long-term care can be included in medical expenses. See Maintenance and personal care services under Long-Term Care, earlier. Additionally, certain expenses for household services or for the care of a qualifying individual incurred to allow you to work may qualify for the child and dependent care credit. See Pub. 503.
You can also include in medical expenses part of the amount you pay for that attendant’s meals. Divide the food expense among the household members to find the cost of the attendant’s food. Then divide that cost in the same manner as in the preceding paragraph.
If you had to pay additional amounts for household upkeep because of the attendant, you can include the extra amounts with your medical expenses. This includes extra rent or utilities you pay because you moved to a larger apartment to provide space for the attendant.
So what's the answer? Are there in-home care tax deductions?
The short answer is, “go ask your CPA”. Deductions available for in-home care are nuanced and based on individual circumstances that may be complicated. We like to think the moral of the story is that you really do need to work with a professional whether you are doing your taxes or seeking in-home care.
At Abby Services, we may not be able to help you with your taxes but our years of experience can certainly help you find excellent in-home care.