Being a caregiver for an ailing family member can take a heavy emotional toll and a heavy financial toll on the family budget. There’s the cost of medications, doctor’s appointments, and various medical equipment to consider. While most of these costs will be covered if the patient is enrolled in hospice care, these costs can be hard to cover out of pocket.
Thankfully, the IRS does allow some of these costs to be counted as tax deductible. These deductions won’t totally recoup the cost of caregiving, but they can help balance the budget a bit.
Defining Medical Expenses
According to the IRS, a medical expense is defined as, “the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body.”
Caregivers can write off the cost of medical expenses made on behalf of qualifying relatives. This includes payments made for doctors, surgeries, medical supplies and equipment, and a few other related expenses.
As mentioned above, in order for these payments to qualify as tax deductible they must be in regard to a qualifying relative. The IRS defines a qualifying relative as, someone who the caregiver provides over half of the support for in a year and claimed a total income of less than $4,050 on last year’s tax return. Dependents can also count as qualifying relatives in most cases.
It’s important to note that the qualifications of a medical expense and a qualifying relative are both subject to change as the IRS sees fit. So, before you claim a caregiver tax deduction, make sure you’re doing so based on the current IRS standards. For full definitions and regulations, go to www.irs.gov.
There are also limits to the amount of deductions you can claim in each year. Tax deductions are limited to the amount of total medical expenses that surpass 10 percent of adjusted gross income if the taxpayer is 64 or younger, or 7.5 percent if the taxpayer or spouse is 65 or older.