Tax Deductions and Out of Pocket Health Care
Along with the worries that come when you or a loved one becomes incapacitated, you may also have to consider the extra expense of hiring people to come in and help you with basic needs.
Some insurances will pay for nurses and caregivers to come to your home, and sometimes you will have to pay for those things out of your own pocket. The good news is the IRS may allow you to deduct some or all of those necessary medical expenses you paid.
IRS Deductions
According to IRS publication 502 Medical and Dental Expenses, ”Qualified long-term care services are necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, rehabilitative services, and maintenance and personal care services (defined later) that are:
- Required by a chronically ill individual, and
- provided pursuant to a plan of care prescribed by a licensed health care practitioner.”
The individual must be unable to perform at least two activities of daily living unless substantially assisted by another person for at least 90 days. Also, requiring substantial supervision to be protected due to severe cognitive impairment.
Maintenance and Personal Care Services
The primary purpose is to provide a chronically ill person with needed assistance, including protection from health and safety threats due to severe cognitive impairment.
What the IRS considers activities of daily living include:
- toileting
- bathing
- dressing
- eating
- Transferring
- Continence
Out-of-pocket health care expenses include medical services, medical supplies such as eyeglasses, bandages, artificial teeth, hearing aids, transportation for medical care, and prescription drugs. IRS publication 502 lists more deductions and eligibility.
Taxpayers and their dependents are allowed the standard monthly amount without questioning their spending. If the amounts they spend are more than the total allowed by the health care standards, the taxpayer must provide documentation to show why those expenses are necessary.
If you have questions about home health care and the different levels of service we provide, please contact All American Senior Care Services at (903) 628-5580.