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Home Care Tax Deductions: Understanding New Tax Benefits for Senior Care

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For those of you with a senior currently (or soon to be) enrolled in senior care services: Do you know about home care tax deductions and how you can use them to benefit your family?

We want to help you understand these tax deductions, but first, we need to iterate that Home Care Assistance does not officially offer tax advice. Instead, we recommend that you seek the help of a professional.

Now, let’s get started!

One of the first things to know is that the IRS allows family caregivers to claim individuals related by marriage, blood, or adoption, as well as friends as dependents. Both parties must meet the IRS requirements, and if they do, the caregiver can claim the dependent and the credit for other dependents on his or her federal tax return.

In order to add a dependent, you will be required to show proof. For this, we recommend keeping detailed records of all the costs associated with caring for your senior.

You may even be required to create and maintain a log to show that the dependent lived with you for at least six months. This involves tracking all receipts and noting any related expenses. Maintaining a log will make sure that you don’t miss any allowable deductions, and it will be part of your documentation if you are audited.

For a single taxpayer or a married taxpayer who does not live with their spouse during the second half of the year, adding a dependent who is related to you and lives with you changes your filing status to “head of household.” This change in status means that your standard deduction will increase.

We also want to make you aware of the special rule regarding parents. You can claim your parent as a dependent and receive the head of household status even if your parent does not live with you. For any other relative to qualify, they must have lived with you for at least six months for you to receive the head of household status.

Finally, you can make deductions based on the expenses incurred in order to cover your senior’s medical costs that are not reimbursable. When filing your yearly taxes, it is a good idea to have a professional prepare or review your tax return before finalizing the details.

Below is a list of the allowable deductions:

  • Assisted living charges for medical reasons
  • Prescribed medicines and equipment
  • Insulin
  • Transportation to appointments or services
  • In-home health care worker, if you are working
  • Activities for older people with special needs
  • Home and vehicle modifications needed for safety or mobility
  • Copays and deductibles
  • Acceptable therapies not covered by insurance
  • Eyeglasses
  • Physical therapy
  • Bandages
  • Hearing aids

At Home Care Assistance, we know that caring for a senior is a great responsibility. It is our hope that understanding these home care tax deductions that some of that responsibility will be a little bit lighter. Please feel free to call us for further help.

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