Are Home Care Expenses Tax Deductible?

Home care expenses can significantly impact household finances. The Internal Revenue Service (IRS) allows for the deduction of certain medical expenses, including those related to home care. Understanding these rules can help individuals reduce their taxable income.

Defining Qualified Medical Expenses

The IRS defines medical expenses as costs for diagnosis, cure, mitigation, treatment, or prevention of disease, and treatments affecting any part or function of the body. For home care, this definition extends to services and equipment primarily intended for medical care. This includes in-home nursing care, therapy services, and assistance with activities of daily living (ADLs) if medically necessary and prescribed by a physician. Medically necessary home modifications, such as building entrance or exit ramps, widening doorways, or installing grab bars, can also qualify as deductible medical expenses. Durable medical equipment, like walkers, wheelchairs, or hospital beds, is deductible when prescribed by a doctor.

Expenses for ordinary cleaning, cooking, or general household help are typically not deductible unless provided as part of qualifying long-term care services for a chronically ill individual. Similarly, the cost of meals or lodging is generally not deductible unless provided in a medical facility or as part of eligible long-term care. The primary purpose of the expense must be for medical care rather than general well-being or convenience.

Eligibility for Deduction

For home care expenses to be deductible, specific criteria regarding the individual receiving care must be met. The care must address a diagnosed medical condition. A key aspect of eligibility involves long-term care services for a “chronically ill” individual. This certification must come from a licensed healthcare practitioner. An individual is generally considered chronically ill if they are unable to perform at least two activities of daily living (ADLs) without substantial assistance for a period expected to last at least 90 days due to a loss of functional capacity. The ADLs typically include eating, toileting, transferring, bathing, dressing, and continence.

Alternatively, an individual may qualify as chronically ill if they require substantial supervision to protect their health and safety due to severe cognitive impairment. The certification of chronic illness must be made within the preceding 12 months. The medical expense deduction can be claimed for expenses paid for the taxpayer, their spouse, or a dependent. This includes situations where the person would have been a dependent but for certain income or filing status rules.

Calculating and Claiming the Deduction

Medical expense deductions are itemized deductions, meaning taxpayers must elect to itemize rather than take the standard deduction. Only the amount of qualified unreimbursed medical expenses exceeding 7.5% of the taxpayer’s Adjusted Gross Income (AGI) is deductible. For example, if a taxpayer’s AGI is $50,000, the first $3,750 (7.5% of $50,000) of medical expenses is not deductible. Any expenses beyond this threshold can then be included in itemized deductions.

Meticulous record-keeping is essential to support a medical expense deduction. Taxpayers should retain receipts, invoices, and detailed statements from healthcare providers. These documents should clearly show the nature of the medical care received, who received the care, the service provider’s name and address, and the amount and date of each payment. Proof of payment, such as canceled checks or bank statements, should also be kept. Medical expense deductions are reported on Schedule A (Form 1040), Itemized Deductions.