As a caregiver for an aging parent or sick loved one at home, the last thing you need is financial stress weighing you down. Fortunately, some of the home health care costs may be tax deductible, offering you a bit of financial relief while you continue providing the best possible care.
That’s the good news. The government recognizes how challenging this situation can be and has made it possible for you to deduct some of those home health care expenses from your taxes.
The rules can get a little complicated, but in this article, we’re going to walk you through everything you need to know to maximize those deductions and ensure you get the most bang for your buck.
Home Health Care and Tax Deductions
It’s essential to understand the difference between home care and home health care, as well as the tax implications of each type of care.
Home care typically refers to non-medical care, such as assistance with activities of daily living (ADLs) like bathing, dressing, and grooming. While these services can be essential for the well-being of your loved one, they are not typically tax-deductible.
On the other hand, home health care refers to medical care provided by licensed healthcare professionals, such as nurses, therapists, or home health aides. These services may be tax-deductible, as we’ll discuss in the next section.
Now, there are several types of home healthcare expenses that may be tax-deductible, including:
- Nursing services. These include a wide range of medical care, such as wound care, medication management, and monitoring vital signs.
- Medical equipment. Include items such as wheelchairs, hospital beds, or oxygen tanks.
- Home modifications. These include ramps or widened doorways, which can also be tax-deductible if they are necessary for the mobility and safety of your loved one.
Make sure to keep track of all expenses related to home health care, as well as obtain a doctor’s certification for any medical equipment or home modifications.
How to Calculate Tax Deductions for Home Health Care?
- Calculate 7.5% of your Adjusted Gross Income (AGI): 7.5% x AGI = Threshold Amount
- Subtract the Threshold Amount from your total Home Health Care Expenses: Total Home Health Care Expenses – Threshold Amount = Tax-Deductible Amount
Example:
If your AGI is $50,000: Calculate 7.5% of $50,000:
7.5% x $50,000 = $3,750
Subtract the Threshold Amount from your total Home Health Care Expenses:
Total Home Health Care Expenses – $3,750 = Tax-Deductible Amount
It’s important to note that you can only deduct expenses that are not reimbursed by insurance or other sources. Additionally, you’ll need to itemize your deductions on your tax return to claim these expenses.
Caring for a loved one at home can be both emotionally and financially challenging, but there are resources available to help ease the burden. By understanding the tax implications of home health care expenses and keeping detailed records, you can take advantage of valuable tax deductions and get the financial relief you need.
With this, you can continue providing the best possible care for your loved ones. And encourage them to live their lives with dignity and independence.
KEY TAKEAWAYS:
- Home health care expenses, such as nursing services, medical equipment, and home modifications, may be tax-deductible.
- Non-medical home care expenses, such as assistance with daily living activities, are not typically tax-deductible.
- To qualify for tax deductions, home health care expenses must exceed 7.5% of your Adjusted Gross Income (AGI).
- You can only deduct expenses that are not reimbursed by insurance or other sources, and you must itemize your deductions on your tax return.
