Tax Deductions For Caregiving

Caring for a loved one with a chronic illness or cognitive impairment, such as Alzheimer's disease, takes a lot of time, and, let's face it, a lot of money.

This information is for general guidelines only. Consult a tax professional about your individual situation.

You may be wondering if any of these mounting expenses are tax deductible. You may be able to claim your parent as a dependent on your tax returns if you paid more than half of their support for the calendar year and their gross income was less than the exemption amount, among other criteria. If you and a sibling are splitting the cost of caring for your parent, only one of you can claim your parent as a dependent.

You may be able to include some costs of caregiving if the person in your care is an eligible dependent and you itemize your deductions under medical expenses. The deduction is allowed for medical and dental expenses during the tax year that totaled more than 10% of your adjusted gross income. You can deduct medical expenses for your dependent parent as long as they were your dependent at the time the services were provided or at the time you paid the expenses. Acceptable deductions include things that concern a diagnosis, treatment and prevention of disease – like office visits, medication and durable medical equipment – and transportation to and from medical care.

If you paid for nursing services for your parent in the home or other facility, those may be included as medical expenses, even if they were not performed by a nurse, as long as the services were those that would normally be performed by a nurse. This includes things like giving medication or changing dressings, or providing assistance with activities of daily living, such as bathing and grooming. Homemaking and other household services are not considered medical expenses. The costs of nursing care facility living, adult day care, and assisted living expenses are not as clear cut. The medical care a person receives at the facility is deductible, but the meals and lodging are not. However, if the purpose of the stay in a long-term-care facility is to receive medical care, then the cost of meals and lodging may be included.

If you have made home modifications to care for your aging parent, you may be able to deduct some of those as medical expenses, if the primary purpose was for medical care. If permanent modifications increased the value of your home, the cost of improvement is reduced by the increase in property value. Qualifying improvements may include things like widening hallways to accommodate a wheelchair, installing railings or support bars, modifying kitchen cabinets or equipment, or adding a wheelchair ramp to the home's entrance.

If your parent passed away during the tax year, you still may able to include medical expenses paid before death in figuring any deduction for medical and dental expenses. It is very important to keep all documentation about the care given to your loved one, including plans of care and certifications. Be sure to keep notes from all care providers about any incidents of unsafe or dangerous behavior – wandering, falling, etc. Because Alzheimer's disease causes progressive deterioration, your loved one's situation should be reevaluated every year. Certain expenses that may not qualify in the early stages of the disease may qualify as medical care in later stages. Again, this information is for general guidelines only. Please consult a tax professional about your individual situation.