Can someone deduct the cost of a caregiver?
My mother has a personal caregiver, who works for her full time in her home. She pays the cost of about $4,000 per month out of her own income. Can she deduct the cost as a medical expense on her income tax?
Yes, assuming that they are "qualified long term care services." To satisfy the IRS, you have to verify, primarily by a carefully written letter from her personal physician, that a) she is chronically ill, b) the services are provided in accordance with the physician's plan of care, and c) she required care and supervision to protect her from threats to her health and safety due, for example, to her diminished capacity. Her CPA will rely on Section 213 of the Internal Revenue Code in determining whether or not your mother's care qualifies.
Note: Physicians don't think about tax deductions when they care for their patients. Its OK to tell them about this opportunity and about the need for an appropriate letter or written plan.
Also, these expenses can only be itemized deductions if they exceed 7.5% of her adjusted gross income.
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