How to Claim Home Health Care Costs on Income Tax

Itemizing medically-necessary home health services can help lower your tax liability.
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If you’re looking for ways to save money come tax time, taking a closer look at the medical expenses you paid out-of-pocket for the year could give you some tax deductions. With health care costs on the rise, you're likely kicking in more these days toward your medical expenses even if you're covered by insurance. Fortunately, home health care can qualify as a deductible expense as long as the services are medically necessary.

What’s Deductible

If you have to lay out cash of your own to cover home health care expenses, some of the total cost could be deductible on your federal income tax. The deduction applies to you, your spouse or a dependent you claim on your tax return. If you provide more than half the support for another person living with you, you may be allowed to deduct a portion of the medical expenses you paid that insurance didn’t cover. Any costs for home health care services that your health plan pays or reimburses aren’t deductible.

Itemizing Deductions

To claim expenses for home health care and other allowable medical expenses, you must itemize deductions on Form 1040 Schedule A. Under IRS guidelines, you can only deduct the amount of your total medical expenses that exceeds 10 percent of your adjusted gross income. The insurance premiums you pay to cover the cost of medical care are also deductible, provided that you don’t claim the portion of the premium your employer pays toward a group health plan. Even if you pay the entire premium, you can't claim it as a deductible expense if your employer deducts for health insurance premiums before calculating payroll taxes. That's because you've already received a tax benefit.

How the Deduction Works

While expenses you itemize on Schedule A of your tax return won’t give you as much tax relief as a tax credit, the deductions will reduce your taxable income. The more you can lower your taxable income, the less money you will owe Uncle Sam in taxes. Although you can only take a deduction for the remaining cost of medical expenses that go over the 10 percent threshold, it can help lower your tax liability, especially if your medical expenses are high.

Proof of Medical Expenses

Keep careful records to support any medical deductions you claim, storing receipts in a place where you can find them in case the IRS has questions about any medical expenses you’ve deducted. For example, money you pay to a home health agency or home care aide for personal care or housekeeping services don't qualify as a medical expense deduction. However, some of these expenses may qualify for the child and dependent care credit if you work or attend college and need to pay for custodial care for a child or other qualifying dependent.

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