Can You Deduct Home Care on Taxes? + FAQs

Yes – you can deduct certain home care expenses on your taxes, but only if those costs qualify as medical expenses under IRS rules. Non-medical home care services (like companionship or housekeeping help) are not tax-deductible. The type of care and how it’s provided will determine what you can write off on your federal income tax return.

Below, we break down the rules for deducting home care at the federal level, highlight differences in key states, and explain how deductions work for various scenarios – from seniors deducting their own in-home care to family caregivers and even businesses offering care benefits. We’ll also cover common mistakes to avoid, real examples (including a tax court case), and FAQs. Read on for an expert guide that satisfies your every question on home care tax deductions.

Federal Tax Rules for Deducting Home Care Expenses 📑

Under U.S. federal tax law, you can deduct many in-home care expenses if they meet the IRS definition of “medical care.” The IRS allows an itemized deduction for unreimbursed medical expenses that exceed 7.5% of your Adjusted Gross Income (AGI) in a year. This deduction is claimed on Schedule A of Form 1040. Key federal rules to know include what qualifies as a medical expense, who can claim the deduction, and the mechanics (thresholds and documentation). Let’s unpack these:

What Counts as Medical vs. Non-Medical Home Care (Deductible vs. Not Deductible)

For tax purposes, “medical care” is defined broadly as the costs of diagnosing, curing, treating, or preventing disease, or affecting any structure or function of the body. In the context of home care, this means:

Deductible Medical Home Care Services: Services that are primarily for a medically necessary purpose. This includes in-home nursing care, physical or occupational therapy, and personal care services for someone who is ill or disabled when those services are needed to help with their condition. For example, hiring a nurse or qualified aide to administer medications, change wound dressings, monitor vital signs, or assist with activities of daily living (ADLs) (like bathing, dressing, toileting, feeding) due to a documented medical condition can be considered part of medical care. If a doctor has determined that a patient needs assistance at home for health reasons (such as after surgery or due to chronic illness), the cost of that in-home care is usually considered a medical expense. Notably, the caregiver does not have to be a registered nurse as long as the services they provide are the kind that a nurse or medical professional would typically perform. For instance, an aide helping an elderly person with bathing and grooming due to the person’s medical condition is performing deductible medical services in the eyes of the IRS.
Non-Deductible Home Care Services: Services that are personal, custodial, or household in nature, and not primarily medical. These are often termed “non-medical home care.” Examples include cooking, cleaning, laundry, grocery shopping, running errands, or simply providing companionship and supervision without a specific medical treatment component. 💡 Important: The IRS draws a line here – help with general household tasks or companionship is not tax-deductible as a medical expense because it isn’t directly for medical care. So if you hire a homemaker or companion solely to provide company or do light housework for an aging parent, those costs generally cannot be written off.

In many real-life situations, a single home caregiver might perform both medical and non-medical tasks. In that case, you must prorate the expenses. Only the portion of time (and cost) related to medical care or personal care for the patient’s condition is deductible. For example, if you pay a caregiver $1,000 a week and you determine (or have records showing) that 70% of their time is spent on medically necessary care (helping with medications, therapies, and personal hygiene for a patient who can’t do these alone) and 30% on non-medical tasks (like cleaning the house or social activities), then 70% of that cost – $700/week – would be considered a deductible medical expense. The other $300 would be personal/non-deductible. ✅ Tip: Keep detailed records or logs of caregiver activities if they have mixed duties. This way, you can substantiate the medical portion of the expense if needed. The IRS specifically allows the deduction of wages for nursing services, even if performed by a non-nurse attendant, but explicitly disallows the part of the wages attributable to household or personal services. So tracking the caregiver’s duties is essential.

Qualified Long-Term Care Services: There’s a special category under the IRS rules for individuals who are chronically ill and need long-term help at home. If a doctor certifies that your loved one is “chronically ill” (meaning they cannot perform at least two Activities of Daily Living on their own for at least 90 days, or they require constant supervision due to severe cognitive impairment such as Alzheimer’s disease), then personal care services they receive under a prescribed care plan are treated as “qualified long-term care services.” This is important because qualified long-term care services are fully considered medical expenses. In plain English: if your family member needs ongoing assistance with basic daily functions or supervision for safety, and a physician or licensed health care practitioner has created a care plan for them, then the costs of helping with things like bathing, eating, toileting, dressing, and other daily needs are deductible. Even if those are non-medical tasks, they become deductible due to the person’s condition. This rule allows many forms of non-skilled caregiving (which normally would be non-deductible) to count as medical expenses when the patient is chronically ill as defined by the tax law. For example, memory care or dementia-related supervision at home would qualify if prescribed, even though it might be more custodial than medical. This was confirmed in a notable tax court case (Estate of Baral, 2011) where an elderly woman with dementia needed 24-hour in-home supervision. The court allowed nearly $50,000 paid to her personal caregivers to be deducted as medical expenses because a doctor certified she required that care for her safety. The caregivers were not medical nurses, but their services – monitoring and assisting a cognitively impaired individual – were deemed qualified long-term care and therefore deductible.

On the other hand, if someone is not chronically ill and just wants extra help at home, non-medical services remain non-deductible. It’s the element of medical necessity or illness that matters. One common example: hiring a housekeeper or cook for an elderly parent for convenience or comfort (when they are not under a medical care plan that makes those services necessary) would not yield any tax deduction. In summary, medical home care = deductible, purely non-medical home care = not deductible. Always ask, “Is this expense mainly for medical care?” If yes, it likely qualifies; if it’s mainly for personal comfort or upkeep of the house, it won’t.

How the Medical Expense Deduction Works (Thresholds and Claiming on Schedule A)

If your home care costs do qualify as medical expenses, you must navigate a couple of IRS rules to actually claim the deduction:

7.5% AGI Threshold: You can only deduct the portion of total medical expenses (including home care and any other medical costs) that exceeds 7.5% of your Adjusted Gross Income for the year. For example, if your AGI is $100,000, the first $7,500 of medical expenses doesn’t count toward a deduction – only amounts beyond that threshold are deductible. So if you had $12,500 of qualifying home care and other medical expenses, the deductible portion would be $5,000 (the amount above $7,500). This threshold applies to everyone, regardless of age, under current law. It effectively means small medical costs likely won’t yield a tax benefit; typically you need significant expenses relative to income (often due to serious illness or extensive care needs) to benefit.
Itemizing on Schedule A: Medical expenses are an itemized deduction. This means you only get a tax benefit if you forego the standard deduction and choose to itemize all your deductions on Schedule A. In 2025, the standard deduction is quite high (for example, around $13,850 for single filers and $27,700 for a married couple, subject to inflation adjustments). You would itemize only if the total of your deductible expenses – including medical, state taxes, mortgage interest, charity, etc. – exceeds your standard deduction. Many taxpayers, especially seniors with paid-off homes and moderate incomes, might not have enough itemized deductions to beat the standard deduction unless medical expenses are very large. Practical point: if your home care costs are huge (e.g. paying an in-home nurse $4,000/month), it may push you into itemizing territory. But if they are small or you have few other deductions, you might not clear the standard deduction hurdle, in which case the home care expenses won’t actually reduce your taxes. Always calculate both ways (itemized vs. standard) to see which is more beneficial.
Unreimbursed Expenses Only: You can deduct only expenses that you pay out-of-pocket and are not reimbursed by insurance or another program. If, for instance, long-term care insurance or Medicare or Medicaid covers some of the home care cost, you cannot deduct that covered portion. You can only deduct the portion you paid. Similarly, if your parent’s assisted home care is paid by Medicaid (a needs-based government program) or by a state in-home assistance program, you cannot claim a deduction for those amounts. (Medicaid itself isn’t a tax deduction – it’s a benefit. And if Medicaid is paying, you’re not.) The same goes for veterans’ benefits or any other third-party payer. Only unreimbursed expenses qualify.
Proper Documentation: To claim the medical deduction, maintain records such as invoices, contracts or receipts from the home care agency or caregiver, plus proof of payment (cancelled checks, etc.). If the care is of the long-term care type (personal care services for a chronically ill individual), having a doctor’s certification or care plan in writing is highly advisable. In case of audit, you may need to show that the care was medically required – a physician’s statement that “I certify Mrs. X requires daily assistance with bathing, dressing, and other activities for at least the next year due to [diagnosis]” can substantiate the deduction. Also, if you’re allocating part of a caregiver’s time to medical vs non-medical, keep a log or timesheet breakdown. The IRS doesn’t require you to submit that with your return, but you’d want it if questions arise.
Where to Claim: All qualifying expenses get summed up on Schedule A (Itemized Deductions) under the medical expense section. You list the total medical expenses, then subtract 7.5% of your AGI, and the remainder (if any) carries into your itemized deduction total. The tax savings you get is indirectly through a lower taxable income. Medical deductions are not a dollar-for-dollar credit; rather, they reduce your taxable income, which in turn reduces your tax at your marginal rate. For example, $5,000 in deductible medical expenses might save a taxpayer in the 22% bracket about $1,100 in tax (0.22 * 5000).

Heads up: If you employ a home caregiver directly (not through an agency) and you pay them above certain thresholds, you may be considered a household employer. That means you might have to pay employment taxes (Social Security, Medicare, unemployment) for your caregiver – often called the “nanny tax” rules, which also apply to elder caregivers. Those employer payroll taxes (for example, the employer’s share of Social Security tax on the caregiver’s wages) are also deductible as part of medical expenses in proportion to the caregiver’s qualifying medical work. It’s an obscure detail, but if you’re in this situation (hiring a home health aide privately), consult IRS Publication 926 (Household Employer’s Tax Guide) and Publication 502 for guidance. And make sure you follow tax rules for household employees so you don’t get penalized.

Who Can Claim Home Care Deductions (Whose Expenses are Deductible?)

Another important federal rule is determining whose care expenses you are allowed to deduct on your tax return. Generally, you can deduct qualified medical expenses that you paid for: yourself, your spouse, or your dependents. “Dependents” in this context means individuals who qualify as your tax dependents or would qualify except for certain exceptions. Here’s how it breaks down:

Your Own Care: If you are an individual receiving home care and you pay for it yourself (or your spouse pays for it out of joint funds), you can include those costs with your medical expenses on your own tax return. For example, an elderly taxpayer paying for a home nurse to come each day can deduct those costs on their Schedule A (subject to the AGI limit), provided they itemize.
Your Spouse’s Care: If your spouse is the one needing home care, any qualifying expenses you pay for them are treated as your own for deduction purposes (since a married couple filing jointly is considered one tax unit). So a husband can deduct medical home care expenses for his wife or vice versa, as long as they file a joint return (or even if filing separately, there are ways to allocate – but typically joint filers get the benefit together).
A Dependent’s Care: You can also deduct medical expenses you pay for any person who is your tax dependent. A dependent could be a qualifying child or a qualifying relative that you claim on your return. In the context of home care, this often comes up with adult children caring for an elderly parent. If you claim mom or dad as a dependent on your tax return, then you can include the home care costs you pay for them along with your own medical expenses. The same goes for any dependent: if you have a disabled adult child who lives with you and you pay for their in-home care, those expenses are deductible on your return (because that child is your dependent).
**Paying for a Parent or Relative **(not formally claimed): What if you support an elderly parent or relative who has a lot of medical/home care expenses, but you cannot claim them as a dependent because of certain technicalities? Perhaps they have too much income of their own (exceeding the dependency gross income limit, which is $4,500 in 2025 for qualifying relatives) or maybe they file a joint return with a spouse. The IRS has a provision for that: you may still deduct medical expenses you paid for a person who would have been your dependent except that they earned too much or filed a joint return. In simple terms, if you’re supporting mom or another relative and meet the other tests (you provide over half their support, they’re a U.S. citizen or resident, etc.), the fact that you couldn’t claim them as a dependent due to income or because they jointly filed doesn’t bar you from deducting their medical bills you paid. The rationale is that you’re still bearing those costs. For example, suppose your elderly father lives in his own home, has Social Security income slightly above the limit so you can’t claim him as a dependent, but you pay for a home health aide for him every month. As long as you provide over half his total support, you can count the aide’s cost as your medical expense on Schedule A. This is a crucial point for caregiver children: you might be able to deduct Mom or Dad’s home care bills you pay, even if they aren’t an “official” dependent on your return. Just be sure to document that you provide the majority of their support (food, lodging, medical, etc.). Note that if multiple siblings split the costs, only one of you can claim the parent as a dependent (via a multiple support declaration) and typically only that one should take the medical deduction for the expenses paid, or you divide it as per support agreement. Coordination is key in those cases.
Example: Jane provides 60% of the financial support for her 82-year-old Aunt May, including paying for an in-home caregiver. Aunt May has $5,000 in interest income, which is over the limit for Jane to claim her as a dependent. However, because Jane meets the support test and all other criteria (Aunt May is a U.S. citizen, etc.), Jane can still deduct the home care expenses she pays for Aunt May on her tax return. She’ll just list them under medical expenses like any other, even though Aunt May isn’t listed as a dependent. (She should keep proof of the support ratio and Aunt’s income in case of questions.)

Whose expenses can’t you deduct? Generally, you cannot deduct medical/home care expenses paid for someone who is not your spouse or dependent (or potential dependent as described). For instance, you can’t deduct money you spend on a friend’s caregiver, even if out of kindness, unless that friend lived with you all year and otherwise qualified as a dependent. You also can’t deduct expenses that someone else paid for you. And if you’re reimbursing someone (like giving your mom money to pay her caregiver), that typically doesn’t count as you paying the medical expense – it’s best to pay the provider directly if you want to claim the deduction. (The IRS prefers the paper trail of you paying the bills directly.)

Finally, keep in mind that medical deductions have no double dipping: if you paid for home care out of a tax-advantaged account like a Health Savings Account (HSA) or Flexible Spending Account (FSA), you already got a tax benefit (contributions to those accounts were pre-tax). You can’t also deduct the expense on Schedule A. Similarly, if your employer or business reimburses you for the cost, you can’t deduct it. Only out-of-pocket costs that you didn’t otherwise get a break for can be taken.

State Tax Rules for Home Care Deductions 🌐

Tax laws can differ at the state level. Some states follow federal rules for medical deductions, while others tweak the thresholds or offer special credits. We’ll look at a few key states as examples: California, New York, Texas, Florida, and Illinois. These represent a mix of high-tax states and those with no income tax, to illustrate the spectrum of state treatments.

California (CA): California allows itemized deductions on your state return and generally follows the federal rules for medical expenses. This means California also lets you deduct unreimbursed medical expenses (including qualified home care) that exceed 7.5% of your federal AGI. In other words, CA uses the same 7.5% threshold and the same definitions of what’s deductible. If you itemize federally, you’ll likely itemize for CA as well (though California’s standard deduction is much lower than federal, so many CA taxpayers do itemize). One thing to note: California does not conform to some federal changes in other areas, but for medical expenses it currently aligns with the 7.5% floor. So if you deducted home care costs on Schedule A federally, you can also deduct them on your CA (Form 540 Schedule CA) return. Keep in mind, California’s Franchise Tax Board will expect the same documentation if they ever question it. There is no special caregiver credit in California as of 2025 (though bills have been proposed). So the main way to get a tax break for home care in CA is through the regular medical deduction.
New York (NY): New York State also allows itemized deductions and includes medical expenses – but with a twist. New York has its own threshold for medical deductions. NYS uses a 10% of AGI threshold for medical expenses for most taxpayers, not the 7.5% used by federal. In practice, this means it’s a bit harder to deduct medical costs on the New York return. For example, with $100,000 income, NY would ignore the first $10,000 of medical expenses (versus $7,500 federally). If you’re itemizing in NY, you’ll fill out Form IT-196, which is similar to Schedule A, but apply the NY limitation. So, if you have large home care expenses, you might get a federal deduction but possibly less or none on NY if you don’t clear the higher bar. Aside from the threshold difference, New York generally follows the federal definition of medical expenses. So eligible home care costs (nurses, home health aides, etc., for a patient) are deductible on the state return once you clear that 10% floor. Planning tip: Sometimes New York decouples from federal rules – always check the latest NY tax instructions. As of now, just remember 10% is the magic number for NY medical deductions. There isn’t a special NY state credit for family caregivers either, so itemizing is the route to any relief.
Texas (TX) & Florida (FL): Texas and Florida are included in our list to illustrate an important point: these states do not have a state income tax on individuals. Therefore, there is no state income tax return and no opportunity (or need) to deduct medical expenses at the state level. If you live in Texas or Florida, you’ll focus only on your federal tax deduction for home care costs. While you won’t get a state tax break, the upside is you’re not paying state income tax to begin with, which in theory leaves more disposable income to cover things like care. It’s straightforward – for TX and FL residents, everything we discussed in the federal section applies, and there are no additional state hoops to jump through. Just be aware of any property tax breaks or local programs for seniors (unrelated to income tax) that might indirectly help; but income-tax-wise, nothing to deduct in TX/FL.
Illinois (IL): Illinois has a state income tax, but it operates differently from CA or NY. Illinois uses a flat income tax rate and does not allow individual taxpayers to itemize deductions on the state return. Illinois starts its tax calculation from your federal adjusted gross income and then permits a few subtractions and credits, but medical expenses are not a specific deduction on the IL-1040. In short, you cannot deduct home care or any medical expenses on Illinois state taxes. Whether or not you itemized federally is irrelevant to IL – they won’t give you a break for those itemized deductions. (One small consolation: Illinois also doesn’t tax retirement income like Social Security, which can help seniors, but that’s separate.) So if you’re in Illinois, the benefit of your home care expenses will only come on your federal return. Plan accordingly, because even if you have huge medical costs, your Illinois taxable income won’t change.

Other States: Many states fall into patterns similar to the above. Some states, like New Jersey, don’t let you itemize but do allow a separate deduction for medical expenses over a certain percentage of income (e.g., NJ allows medical expenses over 2% of income to be deducted). Others, like Massachusetts, let you deduct certain medical expenses at the state level even if you don’t itemize federally (Massachusetts allows a state deduction for medical expenses over a threshold). If you live outside the highlighted states, it’s worth checking your state’s tax website or instructions to see if you can deduct medical/home care expenses and if the thresholds differ. For example, Minnesota, Hawaii, and Arizona all have some unique tweaks on itemized deductions. However, virtually no state will allow a deduction for non-medical care (they all piggyback on the idea of “medical expenses”). Also, a few states have tried to implement specific caregiver tax credits (as opposed to deductions) to help families caring for elders – these are relatively rare and often capped. As of 2025, no widely available permanent caregiver credit exists at the federal level (though one has been proposed in Congress called the Credit for Caring Act) and only a couple of states have experimented with such credits (often with limited scope). Always stay updated with your state’s Department of Revenue or Taxation for new credits or programs that might come along to aid caregivers.

Summary: State tax treatment of home care expenses can range from fully following federal rules (e.g., CA), to harsher limits (NY), to no deduction at all (IL), to no tax to worry about (TX, FL). Make sure to consider both federal and state implications when planning for the cost of home care – sometimes an expense that doesn’t help on federal (if you take standard deduction) might still give a benefit on state, or vice versa.

Deducting Home Care in Different Scenarios 👥

Home care tax deductions can play out differently depending on who you are and how the care is arranged. We’ll explore a few common scenarios:

1. If You’re an Individual Taxpayer Receiving Home Care

If you are the recipient of home care (for example, a senior or someone with an illness who hires caregivers), the rules are essentially the standard ones: you can deduct your own home care costs on your tax return as a medical expense, provided you itemize and meet the 7.5% AGI threshold. Ensure that the services you’re paying for are primarily for your medical needs. Keep receipts from home health agencies, nurses, therapists, etc. Many seniors in this situation also have other substantial medical expenses (prescriptions, doctor visits, maybe home medical equipment or modifications), so all those can be added together. You would list them on Schedule A just like any other medical costs. One thing to consider: if you (or your spouse) are 70 or older, you might have more medical expenses and possibly a lower income (making it easier to exceed 7.5% AGI). Don’t forget things like mileage to medical appointments and health insurance premiums – these also count and can combine with home care costs to reach the threshold. Also, if you’re using an in-home caregiver and you’re paying them directly, remember the household employee payroll tax issue discussed earlier – it often applies to individual care recipients. Don’t let that scare you off; just handle it properly.

In summary, as an individual receiving care, yes, you can deduct those expenses (they often are quite high). The deduction will reduce your taxable income, which is especially valuable if you still have significant taxable income (like retirement account withdrawals or other income). If your income is low enough that you owe little tax, the deduction might not be as useful, but it can sometimes help at the state level even if not federally. Check if you qualify for any special federal tax credits as well (e.g. the Credit for the Elderly or Disabled is a separate credit available to low-income seniors over 65 or on disability pension, but that’s not directly related to home care costs). For most, the medical deduction is the main avenue.

2. If You’re a Family Caregiver Paying for Someone Else’s Home Care

Many taxpayers find themselves paying for the care of an aging parent, disabled spouse, or another relative. In this scenario, the ability to deduct depends on the dependency and support rules we covered. First, see if you can qualify the person as a dependent on your tax return. If you can, that’s ideal – you’ll potentially get a small Credit for Other Dependents ($500) on your return, and you clearly can deduct the medical expenses you cover for them. But even if they aren’t a formal dependent, as we noted, you can likely deduct the expenses if you provide over half their support.

Key steps for caregivers:

Add up how much support you provide (in money or value) vs. the person’s own income and support. This determines if you meet the >50% support test.
Pay the care provider or service directly whenever possible. For example, pay the home care agency yourself rather than giving money to your parent to pay. The IRS prefers direct payment as evidence that you incurred the expense.
Keep documentation of the relationship (birth certificates to show it’s your parent, for example) and their income (to show why they couldn’t be claimed as dependent if they earn too much, etc.).
Itemize your deductions and include those costs like you would your own.

Example: Alex pays $20,000 in 2025 for in-home adult day care services and a part-time nurse for his mother, who has Alzheimer’s and lives with him. Alex provides 60% of his mom’s total support (the rest is covered by her small Social Security checks). He cannot claim her as a dependent because her gross income (mostly Social Security) is slightly above the limit, but because he passes the support test, Alex can count the $20,000 as medical expenses on his Schedule A. This easily blows past 7.5% of his AGI, so Alex ends up itemizing and deducting a large portion of it. This saves him thousands in taxes. If Alex’s sister also contributed to the costs, they’d need to decide on a multiple support agreement (IRS Form 2120) so that one of them could claim the mom as a dependent (since only one tax return can claim one person). Whoever actually claims the dependent (or provides the most support if not officially claimed) would typically take the medical deduction. Communication is important in families to maximize tax benefits without stepping on each other’s toes with the IRS.

Also, caregivers should be aware of the Child and Dependent Care Credit. This is different from the medical expense deduction, but relevant: If you pay someone to care for a dependent who is unable to care for themselves (physically or mentally) so that you (and your spouse) can work or look for work, you might qualify for a tax credit for a portion of those costs. This can apply to paying for adult day care or in-home care for, say, an infirm parent or a disabled spouse, as long as the person needing care lives with you more than half the year and is your dependent (or could be except for the gross income rule). The credit is generally a percentage (20-35%) of up to $3,000 of care expenses for one individual (up to $6,000 for two or more dependents).

So while it won’t cover huge costs, it’s something – up to $600 (20% of $3k) to maybe $1,050 (35% of $3k) per person as a direct credit off your taxes. If you qualify for this credit, you cannot also deduct those same care expenses as medical – no double benefit. Usually, if the care qualifies for the credit, it might not qualify as a medical deduction because it might be non-medical supervision (e.g. an adult day care center that isn’t medical). But in cases where it could qualify as both, you have to choose one: either take the dependent care credit or the itemized deduction. Run the numbers or consult a tax advisor on which is better. Often, large medical costs yield a bigger deduction benefit, but the credit can be useful if your income isn’t super high and you didn’t meet the 7.5% threshold.

In summary, as a caregiver paying for someone else’s home care: Yes, you can often get a tax deduction for it (or sometimes a credit), as long as you follow the dependency and support rules. This can significantly offset the financial burden of caregiving. Just make sure you’re not trying to claim expenses that your sibling or another family member is also claiming – only one person can claim a given expense. It should be whoever actually paid it or agreed among supporters by using the multiple support declaration.

3. Non-Medical and Household Care Services (Is There Any Tax Relief?)

What if the home care services are strictly non-medical – for instance, you hired a housekeeper or a personal aide to do cooking, cleaning, and keep an elderly person company, but they don’t provide health or personal care related to a medical condition? Unfortunately, purely non-medical caregiving or household help is not tax-deductible as a medical expense. The tax code considers those costs as personal living expenses. There is no itemized deduction for general caregiving or household services.

We mention this again because it’s a common misconception: people often assume any elder care expense can be written off, but the IRS requires a medical justification. If you’re just ensuring Mom has someone to chat with and do chores, that’s laudable but not something the tax law subsidizes. One small silver lining: if the person receiving care qualifies as your dependent, you at least get the $500 other dependent credit (which is a one-time fixed credit not tied to expenses). But that’s regardless of whether you spent anything on care – it’s just for having the dependent.

Another scenario: home modifications or equipment for easier living (ramps, grab bars, etc.). These can sometimes be partially deductible as medical expenses (they are not services, but related to home care). For example, installing a wheelchair ramp or modifying a bathroom for accessibility can be a medical expense. The IRS often requires subtracting any increase in home value for big improvements, but many modifications don’t necessarily increase home value (e.g., widening doors, adding grab bars – they are just medical necessities). So don’t overlook that: while the helper’s time cleaning the house isn’t deductible, the $15,000 you spend to retrofit the house for safety might be. We won’t dive deep here, but know that home improvements made for medical reasons can be deductible (see IRS Pub 502 for details on how to calculate that).

Also, some taxpayers ask: Can I count the cost of my own time or lost wages for caregiving? The answer is no – you can’t deduct the imputed cost of your own caregiving labor. Only out-of-pocket expenses count (and again, only if they’re medically related). If you’re incurring expenses to care for someone (like buying their groceries or paying for their transportation), some of those might qualify if they’re part of medical care (e.g., gas driving them to medical appointments is deductible at medical mileage rate). But regular grocery bills or utility bills, even if you pay them for someone, are not medical expenses.

To summarize: Non-medical home care expenses (companionship, custodial care without medical necessity, housekeeping) are considered personal expenses. They do not qualify for any tax deduction under current federal law. Always try to see if there’s a medical angle – if the person has a condition that makes those services necessary for their health or safety, document it, and it might qualify under long-term care rules. Otherwise, for tax purposes, these are just like hiring a cleaning service – no deduction.

4. Business Owners & Employer-Provided Home Care Benefits

Can a business deduct home care expenses? This is an interesting area. If you are a business owner (say you own a small company or you’re self-employed) and you want to help provide care for someone, you might wonder if you can run it through your business for a deduction. The general principle is: personal medical expenses (like caring for yourself or a family member) are not business expenses. You usually cannot just have your business pay for your mother’s home care and then write it off as a company expense – the IRS would flag that as a personal expense being run through the business (which is disallowed). The proper way for a business to handle medical expenses is either as part of a formal employee benefit plan or not at all. Here are some legitimate ways:

Health Reimbursement Arrangement (HRA): If you own a small business, especially a C-Corporation, the business can set up a health plan or HRA that covers employees’ medical expenses. If you as the owner are an employee of your company, the company could reimburse your medical expenses (including home care costs for you as an employee or your dependents) tax-free. The company then deducts those reimbursements as an employee benefit expense. This requires a proper plan setup – usually with the help of a benefits consultant or tax advisor – to ensure compliance with health plan rules. There are special HRAs for small employers (like QSEHRA) and other arrangements, but in essence, this is a way to turn large medical expenses into a company deduction. For example, a family business might hire the spouse as an employee and include the family in a medical reimbursement plan that covers in-home nursing care for a disabled child. The business pays the expense and deducts it, and the benefit is not taxable to the employee (because medical benefits are typically tax-free). Caution: This must be structured correctly; you can’t discriminate in favor of owners only, and there are rules under the ACA to consider. But it’s a potential strategy.
Employee Benefits for Caregiving: Some larger employers offer Employee Assistance Programs or elder care benefits. While rare, an employer might subsidize an employee’s cost of caring for an elderly parent, or offer access to in-home care services as a perk. If an employer provides a direct benefit (like paying for a caregiver for your family member), usually that might be considered a taxable fringe benefit to the employee unless it’s set up under a dependent care assistance program (DCAP) or similar. Many companies have Dependent Care Flexible Spending Accounts – those typically cover child care, but can also cover adult dependent care so the employee can work. If your company has that, you could contribute pre-tax dollars (up to $5,000/year typically) to cover in-home care for, say, your disabled spouse or parent while you work. That essentially gives you a full tax deduction (via pre-tax payroll) for those costs up to the cap, which is often better than itemizing. Employers deduct their contributions to these plans as part of payroll expenses.
Business vs Personal Line: It’s important to separate when a home care expense could ever be a true business expense. There are not many legitimate cases. One could imagine a scenario where a business provides an on-site nurse for employees (deductible as a business expense), or perhaps live-in care as part of a housing benefit (like a caretaker for a property – but that’s not home health care, that’s a different job). If you run a home care business (i.e., you are a provider of home care services), the costs of running that business (paying your caregivers, etc.) are obviously business expenses, but that’s not the context here. For most readers, the key is: if you’re self-employed or a small business owner, your medical expenses are personal. However, you might convert them to a business deduction by using a proper medical reimbursement plan or self-employed health insurance deduction. Note: The self-employed health insurance deduction (an “above-the-line” deduction on Form 1040) covers health insurance premiums, not direct medical care costs. But if you purchase long-term care insurance for yourself through your business, that premium might be deductible (with limits) either as SE health insurance or medical expense. The care itself – you’d still rely on itemizing or an HRA as described.
Employers Hiring Caregivers for Employees: In rare cases, a business might hire a caregiver to assist a disabled employee at work or at home as a reasonable accommodation under disability laws. If those costs are directly related to enabling the employee to work, the business might be able to deduct it as a reasonable accommodation or business expense. But those situations are not common and would involve consultation with legal/tax professionals.

In summary, business owners cannot simply deduct personal home care costs unless they funnel it through an appropriate, legal employee benefit mechanism. If done correctly, a business can fully deduct the expense and the individual isn’t taxed on the benefit – effectively achieving a 100% pre-tax deduction. If done incorrectly, it could be disallowed and even subject you to penalties. For a small business owner who is paying for long-term care for a family member, exploring an HRA or family employee strategy (for instance, hiring your spouse legitimately in the business and covering the family’s medical expenses) can be very tax-efficient. These strategies are complex, however, and outside the scope of this article’s detail – consult a qualified tax advisor or CPA if you think this applies to you.

For most people, the interaction between business and home care will be through Dependent Care FSAs or simply taking the personal deduction. And of course, if you’re paying a caregiver directly, remember to handle employment taxes – which, as mentioned, can themselves be deductible. A business can also deduct its share of a caregiver’s Social Security tax if that caregiver is for an employee’s dependent and part of a plan, but again, rare scenario.

Avoid These Common Mistakes 🚫

When attempting to deduct home care expenses, taxpayers often run into pitfalls. Here are some common mistakes to avoid, along with tips to get it right:

Assuming All Elder Care Costs are Deductible: Simply put, they’re not. Don’t make the mistake of lumping every expense for your aging parent under “medical.” For instance, routine costs of living (food, rent, utilities) or purely custodial services cannot be written off. Only expenses directly related to medical or nursing care count. ❌ Mistake: Deducting your mom’s grocery bills or the housekeeper’s entire salary as medical expense. ✅ Fix: Only deduct the portion of costs that is truly for medical care (e.g., the caregiver’s time spent feeding and bathing Mom because she can’t do it herself, or installing a medical alert system).
Not Meeting the Documentation Requirements: Another mistake is failing to keep proper paperwork. If you get audited and you’ve claimed a large deduction for home care, the IRS will expect to see invoices, receipts, contracts, and potentially a letter from a doctor if it’s long-term care. ❌ Mistake: Paying the caregiver in cash with no records, or not having a written care agreement. ✅ Fix: Always get receipts or sign a simple contract with independent caregivers. If the care is medically necessary, ask the doctor for a note stating the needs. Keep a log of daily caregiver tasks if possible. Good records not only support your deduction but also help you accurately allocate medical vs. non-medical time.
Forgetting the 7.5% Threshold or Itemizing Rules: Some people gather all their medical receipts, excited to deduct them, but then file a standard deduction and those receipts do nothing. Or they don’t realize a big chunk of expenses won’t count because of the AGI floor. ❌ Mistake: Assuming you’ll deduct $10,000 of home care and it’ll all reduce your taxes, without calculating that if your AGI is $100k, the first $7.5k does nothing. ✅ Fix: Before going through the hassle, estimate your total medical expenses and your AGI. Make sure you understand that only the excess over 7.5% of AGI is deductible. And confirm that itemizing all deductions beats your standard deduction. It’s disheartening, but sometimes even moderately high medical expenses yield no tax benefit if your income is high or you have minimal other itemized deductions. Crunch the numbers to set realistic expectations.
Mixing Up Credits and Deductions: Deductions and credits are different, and choosing the wrong approach can cost you. For example, paying for an adult daycare so you can work could qualify for a tax credit (dependent care credit), but if you instead try to deduct it as a medical expense, you might lose the benefit if you don’t have enough to itemize. ❌ Mistake: Using the medical deduction for $3,000 of adult day services when you could have gotten a 20% credit on that via Form 2441 without itemizing. ✅ Fix: Always evaluate if a tax credit (which reduces tax directly) is available for your situation (like the Child and Dependent Care Credit, or the Credit for the Elderly in rare cases) as opposed to an itemized deduction. Sometimes the credit is more beneficial or easier to get. Deductions are valuable but credits can be better if you qualify.
Not Allocating Mixed Services: As discussed, many caregivers do a bit of everything – medical care and household help. A frequent mistake is trying to deduct 100% of the caregiver’s cost when only, say, 50% of their duties were medical. This could be disallowed if scrutinized. ❌ Mistake: Writing off your caregiver’s entire $800 weekly paycheck when they spend half their time cooking and cleaning. ✅ Fix: Do a reasonable allocation. Perhaps determine they spend 4 hours a day on direct personal care and 4 on non-medical tasks. Then only deduct 50% of the wage (and associated employer taxes, if any). Document how you came up with the split (e.g., a daily journal or their job description). The IRS doesn’t require perfection, but you need a good-faith estimate backed by records.
Claiming Expenses You Didn’t Pay: You can only deduct what you paid. Sometimes multiple family members contribute to care or the person receiving care pays part of it themselves. Claiming amounts that someone else covered is a mistake. ❌ Mistake: Your sister paid the nursing aide for your dad for 6 months, you paid for 6 months, but you attempt to deduct the full year’s cost. ✅ Fix: Only deduct the portion you paid. If you’re all pooling money, consider a formal arrangement where one person pays all the bills and the others reimburse that person, so that one taxpayer can legitimately claim the whole deduction (often the one who can benefit the most from it, arranged via a multiple support agreement if necessary).
Missing Out on Related Deductions: People often focus on the big ticket (the caregiver’s fees) and forget the ancillary expenses that are also deductible. This isn’t exactly a “mistake” but a missed opportunity. Don’t forget things like prescription medications, medical supplies, home modifications for medical reasons, mileage or travel costs to doctor visits, insurance premiums for long-term care or health insurance – these can all be part of your medical deduction. Also, if you had to pay a placement agency or incur legal fees to set up guardianship for a incapacitated person, some of those costs might be considered medical (for example, legal fees to authorize medical care decisions). Missing them means leaving money on the table. ✅ Tip: Do an exhaustive review of all out-of-pocket costs related to the person’s care and health. It’s better to compile too much and then filter out non-qualifying items than to overlook deductible expenses.

By avoiding these pitfalls and following best practices, you can maximize your tax relief for home care costs and steer clear of trouble with the IRS. When in doubt, consult IRS Publication 502 for a comprehensive list of what’s deductible, and consider getting professional tax advice for complex situations.

Examples: When Home Care is Deductible (and When It’s Not) 📖

To make these rules more concrete, let’s look at a few realistic scenarios and whether the home care expenses would be tax-deductible.

Home Care Scenario	Tax Deductible?
1. Post-surgery in-home nurse for a short-term medical need: An individual hires a licensed nurse for two weeks at home after a major surgery to change dressings, administer IV medications, and monitor recovery. Cost is $3,000, paid out-of-pocket.	Yes. This is a direct medical expense for post-operative care. The services are clearly medical (medication administration, wound care). The $3,000 can be included in medical deductions (subject to the 7.5% AGI threshold). Make sure to get receipts from the nursing service.
2. Long-term caregiver for Alzheimer’s patient: A daughter pays $4,000/month for a home aide to assist her father who has severe dementia. The aide helps with feeding, bathing, supervision (he cannot be left alone). A doctor certified he needs full-time care. The father’s only income is Social Security; the daughter covers most of his expenses.	Yes. The entire cost is considered a medical expense under qualified long-term care services. Even though some tasks (feeding, etc.) are personal in nature, because her father is chronically ill and the care is per a doctor’s plan, it’s all deductible. The daughter can include the $48,000/year in her medical expenses. This will far exceed 7.5% of her AGI, so it should result in a large deduction, provided she itemizes. She should keep the doctor’s certification and caregiver invoices.
3. Companion care for an elderly relative without medical needs: An elderly aunt (who is relatively healthy) has a companion visit daily to play cards, prepare meals, and do light housework. The aunt’s niece pays $500/week for this help to keep her aunt from being lonely and to handle chores. The aunt does not require any medical assistance, just company.	No. These expenses are not deductible as they are not for medical care. The companion’s services are personal and household-related. There is no illness or disability necessitating the care (beyond perhaps general age-related convenience). The niece cannot deduct this $500/week. It’s a kind gesture but gets no tax break. If the aunt eventually needs medical care, the tax situation would change.

In the first two scenarios, there was a clear medical condition driving the need for care – making those costs eligible for deduction. In the third, it was optional/helpful but not medically required – not eligible for deduction. Always identify the primary purpose of the expense: medical necessity vs. personal convenience. That will usually tell you deductibility.

Let’s also consider an example involving business owner planning:

Scenario: John is self-employed and provides more than half the support for his disabled wife who needs at-home care. He pays $10,000 for home caregivers during the year. Instead of paying them personally, John’s S-Corp establishes a reimbursement plan that covers employees’ family medical expenses. The S-Corp reimburses John $10,000 for the caregiver bills and deducts it as an employee benefit expense. John does not include this $10,000 as income. Result: John effectively got a full $10,000 tax-free benefit (equivalent to a deduction) through his business, bypassing the 7.5% threshold. This scenario is complex and requires professional setup, but it shows one way businesses can handle such expenses. If John couldn’t do that, he would have tried to deduct the $10k on Schedule A (where, if his AGI was, say, $130k, only the amount over $9,750 (7.5%) would count – so he’d get a $250 deduction, which is minimal). Using the business plan gave him a much better outcome. Not everyone has this option, but it’s worth noting for entrepreneurs.

Key Terms and Definitions 🗝️

To navigate home care deductions confidently, you should understand some key tax and care-related terms. Here’s a quick glossary:

Adjusted Gross Income (AGI): Your gross income minus certain above-the-line deductions (like traditional IRA contributions, self-employed health insurance, etc.). It’s found on line 11 of your Form 1040. The 7.5% medical deduction threshold is based on your AGI. Lower AGI makes it easier to deduct medical expenses; higher AGI raises the bar.
Itemized Deduction: An expense that can be claimed to reduce taxable income, listed on Schedule A. Itemized deductions include medical expenses, state/local taxes, mortgage interest, and charitable contributions, among others. You choose to itemize if the total exceeds your standard deduction. Medical expenses (including home care) are one category of itemized deductions.
Schedule A (Form 1040): The tax form used to report itemized deductions. This is where you total up medical expenses (subject to the AGI floor), as well as other deductions. If you use Schedule A, you forego the standard deduction. Home care costs would appear on the line for medical and dental expenses.
Dependent: For tax purposes, a person (child or relative) who meets IRS tests (relationship, support, income, residency, etc.) that allow you to claim them on your tax return. A dependent can be a qualifying child (under 19, or under 24 if a student, etc.) or a qualifying relative (which can include an elderly parent, or any family member, even if not actually “relative” by blood in some cases, who lives with you and you support). Being able to claim someone as a dependent can affect your ability to deduct their medical expenses and can confer credits. Remember, a person doesn’t have to be claimed as an official dependent for you to deduct their medical costs, if they meet the support test as described earlier. But generally, “dependent” is the term for someone listed on your taxes as being supported by you.
Medical Expense (for tax purposes): The IRS definition includes costs for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for treatments affecting any part or function of the body. It covers services by medical professionals, equipment, supplies, and also qualified long-term care services. Key: the expense must be primarily to alleviate or prevent a physical or mental defect or illness. If it’s merely beneficial to general health (like vitamins or a vacation), it’s not a medical expense. So, a home health aide’s fee to help a Parkinson’s patient is a medical expense; paying for a vacation companion is not.
Qualified Long-Term Care Services: As defined in tax law (IRC Section 7702B), these are services required by a chronically ill individual, provided pursuant to a plan of care by a licensed health care practitioner. “Chronically ill” means the person can’t perform at least two ADLs (activities of daily living) without assistance for at least 90 days, or has severe cognitive impairment and needs supervision. Qualified services include maintenance and personal care services needed by that person. These costs are treated as medical expenses. Essentially, this covers the non-medical support (feeding, bathing, etc.) for someone who cannot live independently due to disability or cognitive issues. It’s the basis for deducting many home care costs for dementia, ALS, Parkinson’s, and other long-term conditions.
Activities of Daily Living (ADLs): Basic personal tasks of everyday life, used in determining long-term care needs. They typically include bathing, dressing, eating, toileting, transferring (getting in/out of bed or chair), and continence. If a person needs help with at least two ADLs, they may be considered chronically ill for deduction (and long-term care insurance) purposes. ADLs often come up when certifying someone for long-term care services deductions.
Chronically Ill Individual: For medical deduction purposes, a person certified (within the last 12 months) by a health professional as unable to perform at least two ADLs without help for a period of at least 90 days, or someone who requires substantial supervision due to severe cognitive impairment (like advanced dementia). This definition is crucial to unlock deduction of long-term care type home care services. If your family member meets this, you can deduct a broad range of their care costs.
Dependent Care Credit: A federal tax credit (also known as Child and Dependent Care Credit) for a percentage of expenses you pay for the care of a qualifying person so that you can work. A qualifying person can be an under-13 child or an older dependent (or spouse) who is unable to care for themselves. The credit is claimed on Form 2441. It’s separate from medical deductions – you can’t double count expenses. Often used for daycare, it can also apply to adult day care or in-home care for a disabled adult during work hours.
Credit for Other Dependents (ODC): A $500 non-refundable credit available for each dependent who isn’t a qualifying child under 17 (for whom the $2,000 Child Tax Credit applies). So, a dependent parent or disabled adult child, for example, would qualify the taxpayer for this $500 credit. It’s not directly tied to any expenses; it’s just a family tax benefit. If you support and claim an elderly parent, you likely can get this credit. It’s part of the post-2018 tax law changes that replaced personal exemptions with credits.
Franchise Tax Board (FTB) / Department of Revenue: These refer to state tax authorities (FTB is California’s tax agency). If we mention, for instance, that the FTB follows federal 7.5% rules, it means the California tax authority uses the same guidelines. Every state has its own tax department that may issue guidance on medical deductions for state returns. For example, the New York Department of Taxation and Finance will instruct that NY has a 10% threshold. It’s good to be familiar with your state’s terminology and forms (e.g., NY IT-196 for itemizing).
Household Employee: If you hire an in-home caregiver and control their work (set their hours, tasks, etc.), the IRS likely considers them your household employee (unless they’re clearly an independent contractor with their own business). As a household employer, you may have to withhold and pay FICA (Social Security and Medicare taxes) and issue them a W-2. The wages you pay, as well as the employer taxes, can be part of the medical deduction (for the portion of medical care). But being a household employer is a responsibility – requiring you to file Schedule H with your 1040 and potentially state employment forms. Misclassifying a worker or not paying required taxes is a mistake to avoid. Many families go through home care agencies (who handle employment and taxes) for this reason, even though agency care can cost more.

Knowing these terms will help you better understand official guidance and communicate with tax professionals about your situation.

Pros and Cons of Claiming Home Care Expenses on Your Taxes ⚖️

Is taking the home care deduction worth it? What are the upsides and downsides? Here’s a quick comparison of the pros and cons:

Pros (Advantages) 😊	Cons (Potential Drawbacks) 🙁
Tax Savings on High Expenses: If you’re incurring large home care or medical costs, the deduction can significantly reduce your taxable income, saving you potentially hundreds or thousands of dollars in tax. It’s one of the few ways the tax code helps cushion catastrophic medical costs.	Threshold & Itemizing Hurdle: You only get a benefit if expenses are very high relative to income (above 7.5% of AGI) and if you itemize. Many people, especially after recent tax law changes, take the standard deduction and get no benefit. Small or moderate home care costs often won’t qualify.
Encourages Care for Dependents: Tax deductions (and credits) provide some financial relief for family caregivers, which can encourage people to support elderly or disabled relatives at home. Essentially, it somewhat eases the economic burden of doing the right thing for family.	Record-Keeping Burden: To safely claim the deduction, you need diligent record-keeping. Tracking medical vs non-medical hours, keeping receipts, possibly dealing with household payroll – it can be administratively burdensome. Mistakes in documentation can risk the deduction if audited.
Broad Definition of Medical (if qualified): The rules, especially for long-term care, are fairly generous in what counts (personal care, nursing, therapy, etc.). Even unlicensed caregivers’ costs can be deductible if criteria are met, meaning you’re not restricted to only hospital bills. This breadth can maximize what you claim.	Limited to Income Tax Reduction: A deduction only offsets income tax. If you have low income (perhaps due to high medical costs you’re offsetting), you might not owe much tax to begin with, limiting the deduction’s usefulness. Also, there’s no federal refundable credit for caregivers – any unused deduction is essentially wasted.
State Tax Benefits (in some cases): If you itemize federally, some states give you an extra bite at the apple. For example, if your state taxes income and allows medical deductions with a lower threshold or no threshold (like NJ’s 2%), you might save on state taxes too.	Complex Rules and Limits: Navigating the dependent qualifications, AGI calculations, and various coordination with other tax provisions (like deciding between a deduction vs. a dependent care credit) can be confusing. There’s potential to file incorrectly, and professional tax help might be needed, which is an added cost.
Could Influence Care Decisions: Knowing that a portion of costs might be tax-deductible could influence someone to opt for at-home care (which many people prefer) rather than institutional care. The deduction might make home care slightly more affordable net-of-tax.	Audit Risk: Large medical deductions can sometimes raise eyebrows at the IRS. If you claim an unusually high deduction relative to income, you should be prepared to substantiate it. While that’s not really a “con” if you’re honest and organized, it’s a stress point – you need to be ready to defend the deduction with paperwork and medical reasoning.

Overall, if you have substantial home care expenses, the pros of attempting to deduct them usually outweigh the cons, as long as you follow the rules. The tax savings can be meaningful during what is often a financially challenging time. However, be mindful of the hurdles: not everyone will be able to benefit due to the threshold, and getting the deduction requires some effort and understanding of the regulations.

FAQs: Common Questions About Home Care and Taxes ❓

Finally, here are some frequently asked questions (FAQs) about deducting home care on taxes, answered in a concise Yes/No format for quick reference. These reflect common inquiries seen on forums like Reddit and Quora:

Q: Can I deduct the cost of a home caregiver for my elderly parent on my taxes?
A: Yes – if you pay for your parent’s in-home medical or personal care and provide over half their support, you can deduct those expenses as medical, subject to the 7.5% AGI rule and itemizing.
Q: Are non-medical caregiving expenses (like a companion or housekeeper) tax-deductible?
A: No. General caregiving, housekeeping, or companionship costs are not deductible as they are not medical in nature. Only care that qualifies as medical or long-term care assistance can be deducted.
Q: If I don’t itemize my deductions, can I still get a tax break for home care costs?
A: No. You must itemize to deduct medical expenses. If your standard deduction is higher than your itemized total (including home care expenses), you won’t get a specific tax deduction for those care costs. (Consider the Dependent Care Credit if applicable in your situation.)
Q: Does hiring an in-home caregiver affect my taxes in other ways?
A: Yes. If you hire them directly, you may become a household employer and need to handle payroll taxes (Social Security, Medicare, etc.). Also, the caregiver’s wages are taxable income for them. But these payroll taxes you pay can be included in your medical deduction allocation.
Q: My parent lives in assisted living – are those fees deductible as home care?
A: It depends. If the primary reason for the assisted living is medical (your parent is chronically ill and needs help with ADLs), then a portion of the cost attributable to medical or personal care services is deductible. Typically, assisted living facilities will provide a breakdown of medical vs room & board. Pure room and meals are not deductible; care services are. (For home care, where the person is at home, there’s usually no separate “room and board” charge, so it’s simpler – just care services.)
Q: Can I claim both the Dependent Care Credit and the medical deduction for home care expenses?
A: No, not on the same dollars of expense. You have to choose. Expenses used for the Child and Dependent Care Credit cannot be deducted as medical, and vice versa. Run the math or consult a tax pro to see which benefit is better for you.
Q: Is long-term care insurance premium the same as home care deduction?
A: No, but related. Long-term care insurance premiums (up to certain age-based limits) are considered medical expenses and can be deducted if you itemize. They’re separate from actual care costs. If the insurance pays for the care, then you can’t deduct the care that was paid by insurance (only your out-of-pocket portion). The deduction we’re discussing is for actual services; insurance is just another possible medical expense.
Q: My sibling and I split the cost of a caregiver for our mom. Can we both deduct it?
A: Only one of you can. Typically, whichever sibling provides more than half of the support (or as per a multiple support agreement) would claim mom as a dependent and deduct the expenses they paid. You cannot each deduct the same expense. You could split the deduction proportional to what each paid, but then technically only the one who can claim the dependent should claim the medical expenses. Coordinate to maximize the benefit without double dipping.
Q: Does Medicare or Medicaid affect my ability to deduct home care costs?
A: Yes. If Medicare or Medicaid (or any insurance) pays for home care services, you cannot deduct those amounts because you didn’t pay them. You can only deduct what you pay. However, if you have a co-pay or spend-down or costs beyond what insurance covers, those out-of-pocket portions are deductible. Also, note that Medicaid waiver payments some family caregivers receive for providing care are usually non-taxable income to the caregiver (under certain rules), but that’s separate from deductions – the person receiving care wouldn’t deduct what Medicaid paid to the caregiver.
Q: If I qualify for a deduction, how do I actually claim it?
A: By itemizing on Schedule A. You will add up all qualifying medical expenses (home care, doctors, dentists, hospitals, prescriptions, etc.), then on Schedule A you’ll subtract 7.5% of your AGI to find the deductible portion. Make sure you keep documentation in case of an audit, but you do not file the receipts with your return – just maintain them.
Q: Is this deduction likely to trigger an audit?
A: Not necessarily. Many people have medical deductions. However, extremely large medical deductions (especially if they seem disproportionate to income) can raise flags. The IRS may ask for proof. As long as you have legitimate expenses and documentation, don’t be afraid to claim what you’re entitled to. Just be organized.
Q: Are there any tax benefits or credits specifically for caregivers at the federal level (outside of the medical deduction)?
A: Currently, only indirect ones. Aside from the Dependent Care Credit and the $500 Other Dependent Credit, there isn’t a dedicated federal caregiver tax credit as of 2025. Proposals (like a “Credit for Caring”) have been discussed, which would give family caregivers a credit up to $5,000, but none have become law yet. So the main federal tax reliefs are the ones we’ve covered. Some states have or are considering caregiver credits, but they’re not common. Always stay tuned to new legislation, though.