Are My Parents’ Home Care Expenses Tax Deductible?
Joseph A. Lux
September 1, 2019
That is the question that I am hearing more and more as my clients begin to face the inevitable issue of caring for their aging parents. Particularly nonmedical “custodial care”. We all want to postpone, or totally avoid, these important discussions. Well, for now, lets take a look at the positive side of this difficult issue, saving taxes.
If you or a family member needs home health care, and you live in New York, plan on it costing about $22 per hour. People who are paying for home health care often overlook the valuable tax deductions that can help to offset this burden. Confusion about this issue is largely based upon the fact that these expenses are not covered by Medicare or other health insurance because the care can safely be given by someone without a medical degree. This is called custodial care. The IRS does not have a similar rule and permits a medical deduction for custodial care.
The IRS rules clearly define qualified tax deductible long term care and its specific requirements. This definition includes the words, “personal care services”. This is the specific language that allows a tax deduction for custodial care. The term “personal care services” is defined as any care the primary purpose of which is to assist a chronically ill individual. This includes nursing care provided by a nonprofessional, and it may include the cost of personal and household services (light house cleaning, etc.) that are also provided by that person. The services can be provided in the recipient’s home or other care facility. A chronically ill individual is defined as “any individual who has been certified by licensed health care provider as being unable to perform at least two of six specified activities of daily living (eating, toileting, transferring, bathing, dressing, and continence) for a period of at least 90 days due to a loss of functional capacity”, or, any person who requires substantial supervision to be protected from threats to health and safety due severe cognitive impairment. Basically, a person who is unable to safely live alone due to a disability or an illness may qualify for this tax deduction.
To qualify as a tax deduction, the care must be provided pursuant to a plan of care prescribed by a licensed health care practitioner. The expenses must be documented out-of-pocket costs that are not reimbursed by insurance or any other source. These expenses may be deductible by the care recipient or a child thereof who claims that parent as a dependent on his or her tax return and pays for the care expenses. Ask your CPA how you can ease the burden of the cost of necessary custodial care. He can help you to benefit from this difficult issue.