Is home care tax deductible? A plain-English guide for families

Is home care tax deductible?

It can be. On a federal return, home care can count as a medical expense when it meets the IRS idea of qualified long-term care services, and you itemize deductions.

In plain words, the IRS says you can include help with personal care, such as bathing, dressing, using the toilet, eating and supervision, when two things are true:

• The person receiving care is chronically ill, as certified by a licensed health care practitioner.
• The care follows a plan of care from that practitioner.

Non-medical home care, the kind It's Your Home Care provides, can fit inside that definition. Help that is not tied to a chronically ill person's needs generally does not.

Two more things decide whether the deduction actually lowers your tax. Your total medical expenses must be more than 7.5% of your adjusted gross income, and you must itemize rather than take the standard deduction. We explain each piece below. Please treat this as general information and check your own situation with a tax professional.

What does "chronically ill" mean for taxes?

For this purpose, a person is chronically ill when a licensed health care practitioner has certified, within the past 12 months, that one of these is true:

• They cannot do at least two everyday self-care activities without substantial help from another person, and this is expected to last at least 90 days. The six activities the IRS lists are eating, toileting, moving in and out of a bed or chair, bathing, dressing and continence.
• They need substantial supervision to stay safe because of severe cognitive impairment, for example from dementia. Our page on dementia care at home describes what that supervision looks like day to day.

A licensed health care practitioner means a physician, a registered nurse, a licensed social worker, or another professional who meets IRS requirements. The certification needs to be renewed every 12 months. In practice, families ask the primary care doctor for a short signed letter saying which description applies and since when.

These are the same two tests most long-term care insurance policies use to start paying. If a policy is already paying, the paperwork from that claim is a good starting point. Our guide to long-term care insurance for home care explains how those claims work.

What counts as a plan of care?

For tax purposes, the plan of care comes from the licensed health care practitioner, meaning the doctor, nurse or licensed social worker, not the home care company. It should say what help the person needs because of their chronic illness, such as help with bathing, dressing, the toilet and supervision, and roughly how much.

A home care agency's written care plan is helpful backup, because it lists what the caregiver does, but on its own it is not the practitioner's plan. At It's Your Home Care, every client has a written care plan and caregivers keep daily notes. Many families keep our care plan with the doctor's letter so the two match.

Which kinds of home care usually count?

Care counts when its main purpose is to help a chronically ill person with the things their illness makes hard, including keeping someone with severe memory loss safe. Here is how common tasks usually line up.

When a caregiver does both personal care and household chores, the IRS generally expects you to separate the two. That is why records showing what the caregiver did, not just how many hours, are so useful. The itemized invoices and daily notes we provide every client make that much easier.

How does the 7.5% of income rule work?

You can only deduct the part of your total medical and dental expenses that is more than 7.5% of your adjusted gross income (AGI). Picture 7.5% of your AGI as a line. Medical expenses below the line do not lower your tax. Only the part above it does. A household with a higher income has a higher line.

The line applies to all your medical expenses together: doctor and hospital bills, prescriptions, insurance premiums you paid with after-tax money, and qualifying home care. Because regular home care adds up over a year, families paying for weekly hours often clear the line when they otherwise would not.

Reimbursed amounts never count. If long-term care insurance, VA benefits or a program paid part of the care, include only what you paid yourself.

Do you have to itemize?

Yes. The medical expense deduction is claimed on Schedule A as an itemized deduction. It only helps if your total itemized deductions (medical expenses above the line, state and local taxes, mortgage interest, charitable gifts and so on) are more than your standard deduction.

Many older households take the standard deduction, which is higher for people 65 and older. For tax years 2025 through 2028 there is also a separate extra deduction for people 65 and older that can be taken whether you itemize or not, subject to income limits. It is worth running the numbers both ways, or asking your preparer to.

Can you deduct home care you pay for your parent?

Often, yes. You can include medical expenses you pay for your spouse and your dependents. A parent can be your dependent if, among other tests, you provide more than half of their total support for the year. Your parent does not have to live with you.

There is a helpful exception for medical expenses. You can include amounts you paid for someone who would have been your dependent except that their income was too high or they filed a joint return. That matters because many parents have pension or investment income above the dependent limit. If you pay more than half of your father's support, including his home care, you may be able to include the care you paid for even though you cannot claim him as a dependent.

When siblings share the support and no one pays more than half, a multiple support agreement can let one of them treat the parent as a dependent. Only that sibling, if they actually pay the medical bills, can include them. It helps to decide which sibling pays the home care invoices before the year starts.

Does it matter who provides the care?

Yes, in two ways.

First, under the tax code, care provided by a spouse or relative generally does not count as a medical expense unless that relative is a licensed professional for that service. Paying a daughter or nephew privately to provide care does not create a deduction for the family. (Being paid as a family caregiver through Pennsylvania's Medicaid program is a separate matter; see our Community HealthChoices guide.)

Second, if you hire a caregiver directly instead of through an agency, you may become a household employer, responsible for Social Security, Medicare and unemployment taxes and the related forms. With a licensed agency like ours, the caregiver is the agency's W-2 employee and the agency handles payroll taxes. Our guide to hiring a private caregiver vs. using an agency explains household employer duties in more detail.

What about the dependent care credit?

The child and dependent care credit is a separate federal benefit for care that lets you, and your spouse if filing jointly, work or look for work. A parent or spouse can qualify if they cannot care for themselves and lived with you for more than half the year. The IRS considers someone unable to care for themselves if they cannot dress, clean or feed themselves, or need constant attention to avoid injury.

• Care can be at home. Care outside your home, such as an adult day program, counts for an adult only if they regularly spend at least 8 hours a day in your home.
• You must have earned income, and married couples generally must file jointly.
• You must name the care provider on Form 2441.
• The credit is based on a capped amount of expenses, and the percentage depends on income.

You cannot use the same expenses for both the credit and the medical deduction. Expenses above the credit's limit can be added to medical expenses, but if you use all your expenses for the medical deduction, none can go toward the credit. Which choice is better depends on your income and how much you itemize.

Can you use an HSA or FSA to pay for home care?

An HSA often can. A health FSA usually cannot.

• Health savings accounts (HSAs) can pay tax-free for qualified medical expenses, which can include qualified long-term care for you, your spouse or your dependents when the conditions above are met.
• Health flexible spending accounts (FSAs) cannot reimburse long-term care.
• Dependent care FSAs through an employer are a different account. They can cover care for a qualifying person so you can work, under rules similar to the credit. Money from a dependent care FSA cannot also be counted as a medical expense, and it reduces what you can use for the credit.

Anything paid from an HSA or reimbursed by an FSA cannot also be deducted on Schedule A.

Does Pennsylvania allow a deduction for home care?

No. Pennsylvania's personal income tax does not allow itemized deductions, and the Department of Revenue lists medical expenses as a federal deduction with no Pennsylvania version. Two Pennsylvania items are still worth knowing:

• Pennsylvania's Child and Dependent Care Enhancement Tax Credit. The Department of Revenue says it equals 100 percent of the federal child and dependent care credit and is refundable. It is claimed on PA Schedule DC with the PA-40. A spouse or dependent who cannot care for themselves and lived with you more than half the year can qualify. You must receive the federal credit to claim it.
• HSA contributions. Pennsylvania follows federal rules for HSA contributions, so they can lower Pennsylvania taxable income within federal limits.

What records should you keep?

A simple folder for each tax year makes tax time much easier. Keep:

1. The practitioner's letter certifying that the person is chronically ill, dated within the past 12 months.
2. The plan of care from that practitioner, plus the agency's written care plan.
3. Itemized invoices showing dates, hours and services, and proof of who paid.
4. Any insurance or program statements showing what was reimbursed, so you only deduct what you paid.
5. For a parent: records of the support you provided, and any multiple support agreement.
6. For the credit: the provider's name, address and taxpayer ID number.

How can It's Your Home Care help?

We cannot give tax advice, but we can make the paperwork easier. Every client receives a written care plan, daily caregiver notes and itemized invoices, the same documents long-term care insurers ask for. Your tax preparer can use them alongside your doctor's letter.

If you are still figuring out how to pay for care, our guide to paying for home care in Pennsylvania brings the options together. And if you would like to talk about care for your parent, call us at (717) 695-2704 or request a consultation.