Hidden Tax Breaks for Retirees

Nursing Expenses

Many elderly people have caretakers who come to their home. These expenses might be deductible as medical expenses. “The main criteria is that the taxpayer must be chronically ill, and the caregivers must be required or prescribed by a physician,” Himmel said.

“If those two criteria are met, then the taxpayer will need to determine if the costs exceed 7.5 percent of their adjusted gross income. If that’s the case, and they do itemize the expenses on the tax return, then the taxpayer can certainly claim the expenses as a deduction to their income.”

According to the IRS, the expenses that are eligible need not be limited to nursing services as long as they are “of a kind generally performed by a nurse.” Therefore, if a caregiver in the home also provides personal and household services, the amount paid to the caregiver must be separated into personal care services and household services.

The IRS gives an example of possible savings: You pay a visiting nurse or caregiver $300 per week for medical and household services. That caregiver spends 10 percent of her time helping you with laundry or shopping. In this case, $270 can be applied to taxes and eligible for a tax break as medical expenses.

Although the $30 paid for household services cannot be included, some maintenance or personal care services needed for long-term care can be included in medical expenses. You can also include part of the cost you might pay for the caregiver’s meals. Extra household costs that you pay because of the attendant, such as extra rent for the space required for an attendant, are also admissible.

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