Caring for an aging loved one is deeply rewarding—but it can also take a toll on your finances. From home care and medical bills to transportation and supplies, caregiving costs can quickly add up. According to AARP, family caregivers spend an average of $7,242 out of pocket annually on caregiving-related expenses, with nearly half spending 26% of their income on care.
The good news? Several tax deductions and credits may help ease that burden!
1. Medical Expense Deduction
If your unreimbursed medical expenses exceed 7.5% of your adjusted gross income (AGI), you may be able to deduct the excess. This includes many types of care and treatment, especially when prescribed by a medical professional.
This is outlined in Publication 502 put out by the IRS but make sure you consult a qualified tax advisors for questions and assistance.
Deductible expenses include:
- Doctor’s visits and hospital stays
- Prescription medications
- Medical equipment and supplies
- In-home care when part of a care plan
- Home modifications for medical purposes
2. Claiming a Senior as a Dependent
If you provide over half of your loved one’s financial support, you may be eligible to claim them as a qualifying relative, even if they don’t live with you. In 2024, their gross income must be under $4,700 (not counting tax-exempt income like Social Security, in most cases).
Qualifying support to a senior family member includes:
- Rent or housing
- Food
- Transportation
- Medical care
See Publication 501 put out by the IRS, and again, seek a consultation with a qualified tax advisor.
3. Adult Dependent Care Credit
Working caregivers who pay for care services so they can maintain employment may qualify for this non-refundable tax credit. The credit can be up to 35% of care expenses, depending on income.
Qualifying care includes:
- In-home care for a dependent adult
- Adult day programs
- Transportation to and from care
4. Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs)
HSAs and FSAs allow you to use pre-tax dollars for qualified medical expenses. If you’re using these accounts to help support your loved one’s care, you may be able to include expenses such as:
- Incontinence supplies
- Medical transportation
- Doctor visits and prescriptions
- Home health aides (if medically necessary)
5. Mileage for Medical Appointments
Driving your loved one to and from appointments? The IRS allows a mileage deduction for medical travel. For 2024, the medical mileage rate is 21 cents per mile. Keep a log with dates, locations, and miles driven for accurate tracking.
6. Tax Advantages of Long-Term Care Insurance
If you or a senior loved one has a long-term care insurance (LTCI) policy, there may be valuable tax benefits available—especially if the policy is tax-qualified, which most are.
Here’s how it can help at tax time:
Premiums may be deductible as medical expenses – The IRS allows you to include a portion (or all) of your LTCI premiums in your medical expense deductions, depending on your age.
Here’s the 2024 deductible limit by age:
- 40 or under: $470
- 41–50: $880
- 51–60: $1,760
- 61–70: $4,710
- Over 70: $5,880
(These limits are per person, not per policy.)
Benefits received are generally tax-free – If your policy starts paying for care (like in-home support, assisted living, or nursing home care), those payments are typically not taxable, as long as they don’t exceed the greater of actual expenses or the IRS’s daily limit (currently $420 per day in 2024 for per diem benefits).
Self-employed caregivers may deduct more – If you’re self-employed and pay LTCI premiums for yourself, your spouse, or a dependent, you may be able to deduct 100% of the premium, up to the age-based limits above.
Only tax-qualified policies qualify for these deductions; check with the insurance provider or a financial advisor if you’re unsure. Keep detailed documentation of premiums paid and benefits received.
Tips for Caregivers During Tax Season
Caring for a loved one comes with financial challenges, but you don’t have to face them alone—or unprepared. Taking advantage of available tax deductions, credits, and long-term care insurance benefits can ease the burden and protect your family’s resources.
- Keep excellent records: Save every receipt, invoice, and care plan
- Get professional advice: Tax rules can change yearly—talk to a tax advisor to make the most of your situation
- Don’t assume in-home care doesn’t qualify: When part of a documented care plan, some non-medical services may be eligible
At Amada Senior Care, we’re proud to be your reliable and knowledgeable partner in senior care—offering trusted, compassionate support for your loved one at home and helping families feel empowered along the way. Our senior care advisors are experts on Long-Term Care Insurance claims management and alternative funding solutions that help pay for in-home care and assisted living services. We’re here to guide families with practical information to help manage the financial side of care. If you are an LTCi policyholder with questions, please CLICK HERE to find an Amada office nearest to you.
