If you pay for at-home home care services, the IRS may let you deduct the cost from your annual taxes. The IRS does allow citizens to deduct certain medical deductions to cover the cost of doctors, therapists, surgeons, psychiatrists, and prescription medications. The IRS also lets people deduct the cost of inpatient hospital stays and nursing home care.
Those deductions help families with loved ones who require healthcare services, but what if you, your spouse, or your dependent needs home care? In this post we will discuss how this expense may also be deducted from your taxes.
Deducting Home Care Costs
Begin by reading over IRS Publication 502, which explains how to itemize deductions for all medical expenses you claim on Schedule A (form 1040 or 1040-SR). The publication talks about what you can and cannot claim as medical and dental expenses and how to deal with any reimbursements you may receive. It also explains what to do if you receive monies from a personal injury claim or sell off any medical equipment.
At-home health maintenance and personal care
The IRS allows deductions for maintenance and personal care services for chronically ill and/or disabled individuals who require assistance, including protection from health and safety threats due to severe cognitive impairment.
To qualify, the individual must be functionally incapacitated and unable to perform at least 2 activities of daily living unless substantially assisted by another person for a minimum of 90 days. According to the IRS, activities of daily living include toileting, bathing, dressing, eating, and transferring.
At-home nursing services as defined by the IRS
A trained nurse performs at-home nursing services. Examples of such medical services include but are not limited to:
- Giving medication
- Changing dressings
- Bathing and grooming
- Assistance with toileting
Nurses may also provide household services such as cleaning, doing laundry, and grocery shopping. Divide the amount of wages paid for those services from the amount spent on actual in-home nursing care before claiming a deduction. In some situations, household services that are provided on behalf of the disabled individual so you can work outside the home may qualify you for a dependent care credit.
If you feed your at-home attendant or otherwise pay for their meals, you may include that cost as part of your medical expense deduction. First, divide the cost of meals among all household members to determine the price of food consumed by the attendant and incorporate that with your itemized medical expense deduction.
Home care workers and employment taxes
In most cases, caregivers and private nurses can be considered household employees. If this applies to your in-home attendant and if you pay Medicare tax, state employment tax, social security tax, or state or federal unemployment tax on their behalf, these costs may qualify as a medical expense deduction. IRS Pub. 926 can help you determine whether or not these deductions apply directly to you.
Deductible home care modifications
If you modify your home to accommodate the medical needs of yourself, your spouse, or your dependent, the cost of doing so may be deducted from your taxes as long as the modifications don't add to the resale value of your home. According to the IRS website, the following are some of the home modifications that are considered medical in nature:
- Construction of access ramps
- Installation of bathroom modifications such as grab bars and railings
- Installation of lifts to accommodate a disability
- Lowering of kitchen cabinets and/or counters
- Modification of door hardware to accommodate disability
- Widening of doorways and hallways to accommodate a wheelchair
Specialized equipment deductions
Gear such as TDD and TTY that allows a hearing impaired or speech impaired person to communicate over a landline may be deducted as a medical expense. The cost of repairing such equipment may also be claimed as a medical deduction.
If the person receiving in-home care is deaf or has a hearing disability, you may be allowed to deduct the cost of a television adapter that displays subtitles. The cost of a specialty TV set that displays subtitles may also be deducted, even if the price is higher than that of a regular set, explains IRS Pub. 502.
How Much Can I deduct?
According to IRS guidelines, you may deduct whatever accrued medical expenses exceed 10% of your adjusted gross income. Insurance premiums that you pay to cover the cost of medical care, in home or otherwise, may also be itemized and deducted from your taxes. If your employer pays part of the premium, their portion is not deductible. If your employer deducts a portion of your paycheck to cover health insurance, that portion is also not deductible, because you've already received that tax benefit.
Medically necessary at-home care service can be costly. Fortunately, you can deduct some or all of this expense and lessen the number of dollars that you send to Uncle Sam during tax season. Before you claim itemized medical deductions, save every receipt you get and store them in a secure place. That way, you will be able to find them just in case the IRS has any questions about the expenses you are deducting.
If you need a home care worker for yourself or a senior that you love, please contact us without delay. We are Caring Senior Service, and we offer a cost-effective alternative to assisted living facilities to help seniors age in place.