More details are available in IRS Publications 17 and 502, available free on the IRS web site at.
It might be worthwhile to review the rules with a tax advisor. There can be a lot of money at stake, especially when you’re helping with significant medical or long-term care needs of a relative. Without a written agreement spelling out the details, the IRS will assume that a relative providing care is doing so without expectation of payment. The pay must be reasonable for the care provided, and the person paid must be qualified to give the care. You cannot combine deductions from income under the self-medication tax system and ordinary medical expense deductions. When a relative provides the care, there must be a written agreement describing the care that will be provided and the compensation for it. The care must be medically necessary or due to medical conditions. The cost of care provided at the patient’s home, including care provided by relatives, can be deductible. 1, 2011)Ī long-term care provider usually itemizes bills so that you can see which expenses were for medical care and which for personal care. Because the patient had a plan of care in place and her doctor believed her diminished capacity made the caregivers necessary, the Tax Court held that the payments to the caregivers were deductible as medical expenses. In one court case a patient was chronically ill due to dementia and her doctor believed caregivers were necessary around the clock for medical reasons as well as safety. A plan of care can be drawn up by a physician, nurse, or physical therapist. These individuals deduct only the portion of the costs that are directly for nursing care or other medical care.īut when the assisted living resident cannot perform two or more of the activities of daily living, the entire cost of the facility can be deducted if the resident has a plan of care in place. Deductions are limited the most for residents who can perform at least five of the six activities of daily living (eating, toileting, transferring, bathing, dressing, and continence). But if medical care is not the primary reason for residing in the nursing home, especially if the resident needs primarily custodial care, only the specific costs attributable to medical and nursing care are deductible. Payments for food, lodging, and other personal expenses are not deductible in that case.ĭeducting the cost of assisted living or home care is trickier, because an assisted living residence or a home primarily is a residential facility not a medical facility. When the primary reason for residing in a nursing home is one's physical condition and the need for readily available medical care, the entire cost of the nursing home is deductible.
Care provided in your home or the dependent’s home also might be deductible by you. You might be able to deduct some or all of the cost of a nursing home or assisted living residence, depending on the reasons the person is in the residence and on the type of care received. These rules most often come into play when a person is helping with the medical or long-term care needs of a relative, usually a parent. So, if you’re helping with the medical expenses of a parent, sibling, or child (including in-laws and step relatives), you might be able to deduct those expenses.
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