Tax Tips for Family Caregivers

This information is from an article written by Cecily Slater, CPA.  It is from the Winter issue of the NFCA Newsletter.  Ms Slater is located in the greater Washington, DC area.

As a family caregiver, you may be entitled to deductions or credits that can help take some of the sting out of tax season.  The following tips should serve as a guide for you to begin thinking about how to maximize your deductions.  Tax rules change, so always check with a tax professional when you are getting ready to file.

Medical Expense Deductions

• Medical insurance premiums (unless pre-tax)
• Prescription medicines
• Doctors’ bills
• Hospital fees for services and/or room and board
• Travel to and from medical appointments (mileage rate for 2008 is 19 cents per mile)

You can deduct only medical and dental expenses that are in excess of 7.5 percent of your adjusted gross income.  If you are in the upper tax bracket, some itemized deductions are phased out altogether.

There’s another catch.  You can deduct only those amounts for which you have not been reimbursed by private insurance or Medicare.  You cannot include in medical expenses amounts for which you are fully reimbursed by your flexible spending account if you contribute on a pre-tax basis.  Payments or distributions for medical expenses out of health savings accounts also cannot be included.

Special Expenses

• Oxygen and oxygen equipment
• Special schools or homes for the mentally or physically disabled (when recommended by a doctor)
• Artificial limbs
• False teeth
• Eyeglasses
• Wheelchairs and repairs
• Acupuncture
• Cost and care of guide dogs for aiding the disabled
• Braille books and magazines if they are more expensive than regular books and magazines
• Hearing aids and the batteries to operate them
• Ambulance services
• Breast reconstruction surgery
• Travel costs including lodging, to receive medical treatment

You can also deduct expenses for equipment or improvements you’ve made to your home for medical reasons, but the IRS will reduce these deductions by the amount such improvements increase the value of your home.  Typical equipment and improvements added initially for medical reasons include:

• Ramps
• Widened doorways and hallways
• Grab bars in bathrooms
• Elevators, stair glides, etc
• Air conditioning
• Accessible shower stalls

Automobile Expenses:  You can include in medical expenses the cost of special equipment or hand controls installed in a car for the use of a person with a disability.  The difference between the cost of a regular car and a car designed to accommodate a wheelchair can also be included.

Nursing Home Care:  Nursing home expenses, per se, are not deductible, but medical expenses incurred in a nursing home are.  This includes the cost of meals and lodging while the patient is in the nursing home, so long as the main reason for being there is to get medical (not simply personal) care.

Nursing, Therapeutic and/or Aide Services:  Wages you pay for an attendant who provides nursing and/or personal care services are deductible as medical expenses.  These services include such nursing activities as giving medication and changing dressings, and typical personal care services such as bathing and grooming the patient.

For whom can you claim medical deductions?

A person generally qualifies as a dependent for medical expense deductions if he or she meets all of the following criteria:

• Is related to you
• Lived with you for the entire year as a member of your household (parents, children over the age of 19, grandchildren and siblings do not have to meet this requirement)
• Was a U.S. citizen or resident, or a resident of Canada or Mexico for at least part of the calendar year for which you are filing taxes
• You provided more than half of that person’s total support for the calendar year.    If you and someone else are providing more than half a dependent’s support, but no one alone provides more than half, you can use what’s called a “multiple support agreement” to claim the dependent, but only one of the parties to the agreement can claim medical expenses for the dependent person.

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