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It is my husband who is ill and housebound. I still work fulltime. He is Medicare age and currently under hospice care too.

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Thank you all for your responses to my question. I contacted a tax consultant who said yes, caregiver expenses are tax deductible. I have not gotten into the details yet and know there are certain criteria to be met. I hired the caregiver through an agency who takes care of the caregiver's pay and whatever else that involves. I just pay the hourly rate. I work fulltime and my husband is retired and not able to care for himself, must be bathed, fed, & etc. The caregiver does this. Tax consultant said if caregiver performs these functions, can get tax deduction. Need agency's tax ID# and itemized statement of what you paid them. I asked the agency for this.
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wonder if that's what the aging office that called yesterday was talking about when they asked if we had a caregiver? hm...
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If the caregiver lives in the same residence and is paid by a medicaid program through a homecare agency, the wages are excludable as a 'vendor' payment. IRS Bulletin 2014-7
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thanks, CatyRay, sounds like was a wonderful move on their part to have invested in rental property - seems to have been a boon to a lot; think my uncle had some, tend to forget but my grandparents had some at one time; my other uncle had his farm land - well, both of them did - that they leased out - though not sure they sold either - but my dad was never one to do that type thing - those were relatives on my mom's side - however, the one uncle on my dad's side, his wife had that type of caregiving but as far as I knew they never had rental property, so not sure how they did it - just know glad my dad was a vet and hub's aunt and uncle, glad he was as well, though they're caught in the cracks - so, again, thanks, and glad they made that move
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How can Mom afford $80K in home health care? My Dad sold a rental property shortly before he died. The proceeds were put into a joint account, which Mom draws from to pay for CNAs. If Mom went to a NH, she'd be paying about the same amount daily ($270) as a private care patient as for 13 hrs of CNAs in her home. I live 400 miles away, and visit for 3-7 days almost every month. She then has the CNA for 3 hours in the am to get her up, showered, dressed, and served breakfast while I go out and jog and/or shop. Mom pays me for the hours I save her on my visits. It's not easy. I couldn't do it 24/7/365.
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Yes, one does provide care to parents out of love; my lawyer drew up an agreement that my parent would pay me for certain care. It's pretty specific. I haven't used it yet to actually collect money because my dad has needed some outside care which is very costly and I'd rather see his money go to that. However, with such an agreement not only can you be paid to provide care but your parent can use the tax deduction.Of course, if you collect the pay you and your employer (your parent) will have to pay the employment taxes. It's frankly a trade-off to find the best care (you) and have a tax deduction if it makes financial sense. It took me a long time to find this out and I'm not convinced that the work it takes to make this function legally is worth it. It is an option and as with all things, depends on your situation.
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May I ask what kind of income - or assets - you all have that you're able to spend $50 to $80K/yr. on caregiving? nobody I know can do that, at least not the ones I'm working with
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I don't believe it is tax deductible. You provide care for your parents out of love.
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Desert192, liability coverage for injuries on someone's property may protect the homeowner and provide coverage for an invitee, but not an employee, which a caregiver is.

I raised this issue with my insurance carrier when we were considering hiring someone directly to do work on my father's house. I was advised that employees are NOT covered by homeowner's insurance and liability provisions. Further, that any homeowner hiring someone not affiliated with any agency providing coverage would be required to get a commercial workers' comp policy, at a high cost.

The comp policy is a commercial line; homeowners is a personal line coverage.
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My tax accountant said that the caregiver is a medical expense and I have kept track of attends diapers, wipes, etc. The medical deduction is a % of our income which was raised last year. Means you have to have a certain amount to be able to write it off. Is expensive so hope for the best.
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I am JimmyW. Earlier I posted saying that I did not think the cost was deductible. I checked with my CPA(very conservative). He says yes they are. Including the Social Security and Medicare that you pay for the caregiver. Also any bookkeeping required to file the P/R Tax Returns. "As long as it is in excess of 10% of your income. It may help to have your physician request the help. Mine will. I probably spend over 50 grand per year.
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I don't think so - that's the extra "liability" you carry in case someone gets hurt on your property. But it will protect you in case the caregiver should get hurt - always good to have.
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I got a prescription from the doctor stating that my dad needed assistance with daily activities; then hired an agency to find the individuals and pay them. My accountant tells me that it is a deductible expense because Medicare doesn't cover it even through the doctor prescribes it. However, these costs are limited to those over 7.5% (if you're over age 65) of your adjusted gross income as a total of all the medical expenses. Depending on the level of your income this may or may not be a useful deduction. Consult a tax specialist and go to the IRS internet site and get their publication on deducting medical expenses or Pub 17, chapter 21. As long as you can link the medical condition to required nursing or care services you're ok.
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See IRS publication 502 for medical expenses deduction. You can deduct the portion of the time spent on medical services for activities of daily living vs. housekeeping. ADL services for bathing, dressing, toileting, eating, and continence. For example, Mom has CNAs at home for 13 hours a day. I figure 50% of the time is devoted to ADL care and the rest to housekeeping and monitoring. Mom is mobile (with a walker), so the % of ADL care would be higher if she was bedridden. Keep in mind that only the portion of total medical expenses above 7.5% of your Adjusted Gross Income (AGI) if you are 65 or older. Mom's CNA care alone for 2015 was oveer $80K, so she won't owe any income tax. For the state return, there is a maximum itemized deduction limit of $9500, so she still owes state income tax!
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Our account says it is as long as the caregiver performs some medical functions like taking blood pressure, giving meds etc. also if the care receiver would otherwise be in a facility due to not being able to care for themselves.
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I wonder if the "workman's comp" rider that one needs on their homeowner's insurance, if they hire outside of an Agency, would be deductible?
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Yes it is deductible as a medical expense. I believe the term is "companion - caregiver" or companion-sitter. You will have to handle the payroll (taxes and withholdings, etc.)in place of an agency if you are self paying the individual. Be sure to draw up a contract specifying their duties (sitting, housekeeping, etc.).
They do not have to be a licensed health professional - but it may be to your advantage if you can find someone who is. A CNA (or someone in school to become one) might be a good choice.
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Didn't say agency was supplying person. Yes, they would withhold the taxes. You just right off the expense as a medical.
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Wouldn't the agency employing the caregiver pay the SocSec? Is Flowerpower paying wages through the agency, or paying the caregiver directly?
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Yes it is deductible but you have to report the wages paid--and pay the correct percentage of social security. And do a W9. Consult an accountant. Like hiring a nanny. I wrote my wife's care people off under medical expenses through the advice from my accountant.
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Check with your accountant. Do you have a doctor's order stating that this care is necessary? Seems then it would become an eligible medical expense.
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From what I read a caregiver is not deductible
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I bet it depends upon your state and the services paid for. In NC, we can't deduct a % of uncovered medical expenses like we could 2 years ago.
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My understanding is that "caregiver cost" is not deductible on your federal or state tax return. Please let me know if others feel that the cost is deductible.
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It is my understanding that the caregiver must be a medical professional such as a nurse or even CNA...However, that is based on no definite knowledge. Perhaps you might want to consider claiming the portion of the caregiver's time that is devoted to "nursing home" type care, such as bathing, feeding, etc., but not light housework.

Grace + Peace,

Bob
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