Tax Deductions for Private Home Care Services

Ezra Home Care interviewed an accountant/tax adviser, Lev Agranovich, about tax deductions for home care.  

Which home care expenses may be deductible?

According to IRS Publication 502, Nursing Services , “You can include medical expenses, wages, and other expenditures for nursing services.  The services need not be performed by a nurse as long as they are generally performed by a nurse.  This includes services connected with caring for the patient's condition, such as administering medication or changing dressings, as well as bathing and grooming.  These services can be provided in your home or another care facility. “

You can also include any care related travel expenses such as trips to and from medical treatment, as well as a percentage of the attendant's meals.

You should remember that expenses for household services such as cooking, shopping, and cleaning are not deductible.  IRS Publications 502, Household Help, says: “You cannot include in medical expenses the cost of household help, even if such help is recommended by a doctor. This is a personal expense that is not deductible.”

How much can I deduct?

First, you must itemize your deductions instead of taking a standard deduction.  You can deduct the expenses that exceed 7.5% of your adjusted gross income (AGI).  For example, if your AGI is $40,000, you’d be able to report medical care deductions expenses that exceed $3,000 (7.5% of $40,000).  If the medical expenses are $2,600, you can’t make any medical care deductions because your medical expenses don’t exceed 7.5% of your AGI. 

For whom is it possible to deduct?

You can deduct for yourself, your spouse, and any legal dependent. A parent or other relative can be considered a legal dependent if you provide more than 50% of their support costs during the tax year.

Does the dependent relative need to live with the taxpayer in order to deduct the medical care expenses?

Your family member doesn’t have to live with you--he or she is able to live in his or her own house, nursing home, or an assisted living facility.  As long as you cover more than 50% of the support costs, these expenses are qualified for tax deductions.

How do I deduct the long-term care insurance premiums?

The premiums you paid for long-term care insurance qualify as medical expenses and can be tax deductible.  But again, you can deduct the expenses only in excess 7.5% of your AGI, and the deduction is limited by your age.

Here are the annual per person premium limits for 2013:

Age 40 or under – $360

Age 41 to 50 – $680

Age 51 to 60 – $1,360

Age 61 to 70 – $3,640

Age 71 or over – $4,550

Lev Agranovich is the founder of Agranovich Accounting and Payroll Services, a full-service tax preparation, payroll, accounting, and business consulting firm located in Newton, MA.

NOTE:  Remember to please consult with your own tax and financial professionals for customized advice and guidance. Ezra Home Care, LLC is not affiliated with Agranovich Accounting and Payroll Services.