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Private Home Care Services May be Tax Deductible

Tax deduction for Private home care services

Hiring a caregiver for assistance with activities such as bathing, dressing, eating, transferring (like moving in and out of bed or a chair), using the bathroom, or managing continence, qualifies as a tax-deductible medical expense. Similarly, care costs for individuals with memory loss, vital for their health and safety, are also tax deductible.

Additionally, expenses incurred from transportation to medical appointments, whether by ambulance, taxi, or private car, are considered deductible medical expenses.

Dividing these medical expenses might save you money during tax filing. Depending on your tax bracket:

  • For those in the lowest income bracket, you could save about 10% of the medical expense.

  • For middle tax bracket filers, potential savings range between 15% to 25% of the medical expense. Think of these savings as a rebate when filing your income tax return.

Illustrative Federal Income Tax Savings for a Single Person in the 10% Tax Bracket:

  1. Scenario with Home Care Expenses:

    • 25 hours weekly caregiver services.

    • With an annual income of $50,000, potential tax savings might be around $3,200 compared to someone not availing of any homecare services.

  2. Expanded Scenario with Home Care Expenses:

    • 30 hours weekly caregiver services (5 hours more than the above example).

    • Here, the tax savings for someone with a $50,000 annual income can be about $4,000: $3,200 for the initial 25 hours, plus an added $800 for the extra 5 hours, when compared against someone without homecare services.

Comparison:

Service Hours Potential Tax Savings
25 $3,200
30 $4,000

 

Thus, by receiving (and paying for) 5 extra hours of homecare services in the second scenario, a person might save an extra $800 on their taxes. This saving roughly translates to a 10% reduction of the additional caregiving service cost.

Please remember that each individual's tax situation is unique. For personalized advice, it's best for you to consult with your tax preparer.

Christy M. Bean Leamy, CFP®, Financial Advocate for the Elderly wrote this article
you can reach Christy at 617-964-6700 CMBL@RCN.COM

See also
"Can Someone Deduct the Cost of Caregiver" on Caring.com
"Claiming Tax Credit for a Caregiver" on Bankrate.com
"How to Get Paid for Being a Family Caregiver" on Caring.com
"Taxes and Alzheimer's"
 on Alzheimer'sAssociation.com

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Founded in 2008, Ezra Home Care offers live-in home care, 24-hour care, and hourly senior care.
All our caregivers are state-certified and provide services like personal carehousekeepingcompanionship, help with medication, and transportation assistance. We've spent 15 years refining our caregiver selection process to ensure families' peace of mind. Reach out for details and quotes.

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