Many elderly or disabled individuals employ private-duty nurses or attendants as an alternative to moving to a nursing home or other long-term care facility. The cost of these in-home services is deductible as a medical expense if they qualify as either (1) medical care or (2) long-term care services.
Often, in-home care will not qualify as medical care, but can still be treated as a medical expense because the services provided are qualified, long-term care services.
To qualify as long-term care services, the taxpayer must be chronically ill and the services must be pursuant to a plan prescribed by a licensed health care practitioner. If the services provided are of a kind generally performed by a nurse, wages and other amounts paid for the services are deductible medical expenses even if the person providing the services is not a licensed nurse. However, long-term care services provided by a relative or spouse are not deductible as medical expenses unless the relative is a licensed professional for those services.
Examples of deductible long-term care expenses
Dorothy is 88 years old and wants to continue to live in her home, although she requires assistance with medication, dressing, bathing, and grooming. Dorothy hires a sitter to live in her home, administer the medication, and otherwise care for her condition. Since the services provided are the same as those provided by a nurse, the expenses incurred are deductible as medical expenses. If the sitter also provides personal and household services (such as cooking and cleaning), the costs must be allocated between medical and other services on the basis of time spent to determine the deductible portion of the expense. However, if the primary purpose of the maintenance or personal care services is providing a chronically ill individual with needed assistance because of his or her disabilities, they are qualified long-term care services and the expenses are deductible.**
Another variation of deductible long-term care expenses
Assume the same facts except Dorothy does not require assistance with medication or specific medical care. If a licensed health care practitioner certifies that Dorothy needs assistance with at least two ADLs (e.g., bathing and dressing), she is treated as a chronically ill individual. Thus, if the in-home services Dorothy receives are provided pursuant to a plan of care prescribed by a licensed health care practitioner, the costs are qualified long-term care expenses and can be deducted as medical expenses subject to allocation if household services are also provided.**
**The IRS has strict regulations regarding the above information and each case is unique. Please contact your tax professional to determine if the medical/in-home care expenses you pay for are qualified medical expenses and if some or all of the expense is deductible on your tax return.Photo credit: Sharon McCutcheon