Tax Deductions for Caregivers

Tax day is fast approaching us. Are you prepared? If you’re caring for a loved one you’ll want to make sure you don’t overlook some of the most commonly overlooked tax deductions for medical expenses and other costs related to caring for your loved one.Taxes for Caregivers

The following are 10 tax deductions often overlooked by those caring for loved ones.

  1. Medical Expenses

The cost to care for a loved one can add up so it’s important to keep track of any medical expenses related to their care. These costs include things like services, equipment, prescriptions, glasses, surgery, hearing aids, bandages, and even wigs are accepted medical expenses. (See comprehensive list IRS’ Publication 502)

  1. Long-term Health Care Costs

If your loved one is considered chronically ill (unable to preform at least two activities of daily living (ADL’s)) you may qualify to deduct long-term care services and long-term care insurance. These include rehabilitation, therapeutic, preventative and personal care services.

  1. Dental Expenses

  Don’t forget about dental expenses.

  1. Energy-saving Home Improvements

Regardless if you are a caregiver or not any energy-saving changes are eligible for a credit. Learn more at EnergyStar.

  1. Mileage

If you’re transporting your parents to doctor’s appointments, out-of-town visits with a specialist or for a procedure keep track of the mileage. You can deduct 23.5 cents a mile.

  1. Home Improvements for Aging Adults

Anything that that doesn’t add value to the property regardless if it’s yours or a family member, such as grab bars, wheelchair ramps, handrails, widening doorways, lifts, or stepless showers can be deducted.

  1. Mortgage Interest

Interest on home loans, construction loans or home equity lines of credit that you may be paying on your parents’ behalf are deductible. There are some limitations so check in advance of filing.

  1. State and Local Sales Tax

If you live in a state that doesn’t have an income tax you are eligible to deduct either state and local sales taxes or state and local income taxes. Use the IRS sales tax calculator to determine which will give you the most benefit.

  1. Charitable Contributions

Donations and out-of-pocket expenses related to volunteering can be deducted. A good example is purchasing ingredients to cook a meal for a homeless person or using your car to transport and elderly person to an appointment. Keep track. They add up.

  1. Estate Tax on an Inherited IRA

If you’ve inherited an IRA from your parents you can take a deduction for the federal estate tax paid on the income. This can get complicated however it’s worth checking out.

It isn’t uncommon for caregivers to take responsibility for some of the costs related to caring for a loved one. These costs add up over time so it’s worth checking into what you can deduct on your taxes. Anything helps. If you have other questions related to their care check out the IRS Tools & FAQs page for frequently asked questions. If you’re working with a tax accountant make sure they’re aware you’re a caregiver. If they don’t ask you about the costs associated with your loved ones care it may be time to find another tax accountant. 

File for taxesTip for keeping track: Keep a folder out in the open where you will remember to keep all associated documents related to your caregiving expenses.

I hope you have found some value in this information. 

May you enjoy peace, love and happiness.


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