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

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Senior Care Tax Deductions

Is your senior currently enrolled in home care services? If they are, or even if they will be soon, we want to discuss the importance of senior care tax deductions – and how they can be used 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.

First things first: The IRS will allow family caregivers to claim individuals who are related to them by marriage, by blood, by adoption, and even friends who are dependents. Both parties are required to meet the IRS’ own requirements to be eligible. If both parties are eligible, the caregiver can claim the dependent and the credit for other dependents on his or her federal tax return.

To show proof of adding a dependent, we highly recommend keeping detailed records of ALL costs that come with taking care of your senior. In some cases, keeping a log is required to show that the dependent lived with you for at least six months, and also to keep track of all receipts and related expenses. Keeping a log additionally ensures that you will not miss out on any allowable deductions, and it will be part of your documentation should you be 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 will change your filing status to one called “head of household”. This change in status means your standard deduction will increase.

Now, here’s a special rule for parents: You can claim your parent as a dependent and receive the head of household status even if he or she does not live with you. All other relatives must live with you for at least six months in order to receive the head of household status.

Lastly, deductions can be made for the expenses from covering your loved one’s medical costs that are not reimbursable. When you file your yearly taxes, it is a great idea to have a professional prepare or review your tax return before finalizing the details.

Below is a list of the allowable deductions:

  • 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
  • Copays and deductibles
  • Acceptable therapies not covered by insurance
  • Eyeglasses
  • Physical therapy
  • Bandages
  • Hearing aids

Often times, caring for a senior comes with great responsibility and financial burden. Understanding all of the available benefits and tax breaks will help relieve some of that burden. Please call Home Care Assistance if we can of further help to you and your family.

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