Tax Deductions for Long Term Care Expenses

If you itemize your deductions on your tax return, you may be familiar with medical deductions. Typically we think of health insurance, copays, prescriptions and OTC medications as contribution to this line item. The truth is that many expenses related to care are also countable as medical deductions. You can claim the cost of your assisted living or nursing home if you need the safe environment and supervision to protect you from the hazards of daily living.

One expense that we often forget to include on our taxes is the cost of caregivers coming into the home. Home care and home health companies will remind you, but what if you are using a gray market caregiver. First, make sure you have a written contract. Then remember to pay the withholdings taxes that are required when you employ a domestic worker. Finally, these expenses are also tax deductible if your doctor determines that you need the care of another person.

This can add up to big tax savings for anyone who needs supervision to maintain a safe environment. If you are paying for any of these expenses for your parents and claim your parents as your dependent on your taxes, then you can deduct any of these long term care expenses on your own taxes if you itemize.

2019-02-13 Update: You can claim this deduction on your 2018 tax returns, only if your total medical expenses exceed 7.5 percent of your adjusted gross income (then you can claim a deduction for the balance). For 2019, your medical expenses must exceed 10 percent of your adjusted gross income.

For more information about tax deductions and itemizing your expenses, please contact your accountant.