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It’s a little known fact that certain costs for caregivers, licensed or unlicensed, may qualify as medical expenses for tax deductions. Maintenance and personal care service costs can be considered qualified medical expenses in cases where the patient receiving the care has been certified by a health-care professional as unable to perform two or more of the six activities of daily living: Bathing, Eating, Dressing, Toiletting, Continence, and Transferring (moving from bed to chair, for example).
Note: An easy way to remember these six activities is to use the first characters in the order I presented them above – B E D To C – this gives us the first five, and the entire mnemonic provides the sixth, Transferring from BED To Chair.
The health-care professional who certifies the patient as incapable of these activities can be a doctor, a nurse, or a licensed social worker, and the certifying professional is required to approve of the care program for the patient.
Another example of such qualifying expenses would be where an individual has dementia which causes serious health concerns requiring 24-hour supervision, determined by the doctor. Both licensed and unlicensed caregivers are hired to care for the individual. Payments for these caregivers are deductible as medical expenses. These expenses are considered qualified long-term care expenses.
Of course, all medical expense deductions are limited to the extent that they exceed 7.5% of the AGI of the taxpayer, and deduction is only relevant if all itemized deductions are greater than the standard deduction (if the standard deduction is available to the taxpayer).
Sterling Raskie, MSFS, CFP®, ChFC®
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