When a senior loved one moves to a nursing home, one of the potential stressors is the cost of their care. From finding a nursing home that meets their budget to considering how to pay for more long-term costs, there are many questions up in the air. One aspect that can be confusing is whether or not nursing home expenses are tax deductible. The short answer is, yes, some expenses related to nursing home care are tax deductible, but there are several layers to this answer. This depends upon the type of nursing home care that your loved one receives, as well as a few other factors.

When these expenses are deductible, what information you should bring to your tax preparer, and how the expenses are calculated for tax purposes are all key factors to understand.

Key Takeaways

Nursing home care may be tax deductible. However, there are a few requirements to meet.
Nursing home care that is medical in nature is likely to be deductible. Nonmedical care costs, lodging, and meals may not count as qualified medical expenses.
Adult family members can be claimed as dependents on your taxes. If you are providing a substantial amount of support to a loved one, you should check to see if you can claim them as a dependent.
Claiming medical care expenses doesn’t always make sense. It’s important to know how to claim these expenses and when you should take a standard deduction instead.

What nursing home costs are tax deductible?

If your loved one is in a nursing home primarily to receive medical care, such as during the progression of a physical or mental disability or illness, then the entire cost is tax deductible as a medical expense. This includes lodging and meals.^[01]

However, if your loved one is in a nursing home for reasons that are primarily nonmedical, such as age or inability to be supported elsewhere, then less is deductible. In this case, only medical services are tax deductible. This would include things like doctor visits, medication, etc. Meals and lodging would not be included, as they are not considered medically necessary.

What requirements must be met for tax deduction purposes?

Your parent can deduct their own nursing home care costs (or that of a spouse) on their tax return, or you may be able to deduct nursing home care costs for your parent(s) on your own return. Whoever claims these expenses must choose to itemize their deductions instead of taking the standard deduction. This only makes sense if your parent (or you) spent more on itemized deductions than is covered by the standard deduction.

You or your loved one will need to claim these expenses on on Schedule A under itemized deductions. Nursing home care is considered under the item “unreimbursed medical expenses.”

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Who counts as a dependent?

If you are covering the majority of your loved one’s living and medical expenses while they are in a nursing home, then they may qualify as your dependent for tax purposes. Dependents include qualifying relatives, such as parents, parents-in-law, aunts, uncles, step-parents, and more, who meet a few key requirements.

The general requirements to claim a loved one as a dependent are:

They have a gross income of less than $4,400.
You provided over half of their support for the year. Please note that any payments made on their behalf through insurance or government support may affect this, so discuss with your accountant or tax specialist if any of these type of payments occurred.
They are a U.S. citizen or a legal resident of Canada or Mexico. ^[02]

In some cases, you may still be able to deduct your loved one’s unreimbursed medical expenses on your taxes if you can’t claim them as a dependent.

Multiple support agreement

In many families, adult children pitch in to cover the cost of their parents’ medical and long-term care. When formally acknowledged, arrangements like these are known as multiple support agreements. If you are part of a multiple support agreement that provides over half of a loved one’s financial support, then formalizing this with the IRS may be beneficial. This is filed using Form 2120, and it essentially verifies that though you alone do not provide the qualifying support of over 50%, the people who also provide support are allowing you to claim your loved one as a dependent.^[03]

In addition to Form 2120, you must secure a signed statement from anyone else who provides more than 10% of the total support to your loved one verifying your claim and waiving their own right to the deduction .

Additional benefits of claiming a dependent

If you can claim your loved one as a dependent, you may also be eligible for certain credits. One of these is the Credit for Other Dependents. This credit exists for dependents who can’t be claimed under the Child Tax Credit. This can be a credit of up to $500 for a dependent who meets certain eligibility requirements.^[04]

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How does deducting medical expenses on taxes work?

The Internal Revenue Service (IRS) allows qualified unreimbursed medical expenses that exceed 7.5% of a taxpayer’s adjusted gross income (AGI) to be deducted.^[01] So, for example, if your AGI was $75,000, only medical expenses that exceed $5,625 could be deducted. If you incurred $8,000 in out-of-pocket medical expenses, then only the amount over the $5,625 would be a deductible ($2,375).

Remember, if all itemized deductions, including qualified medical expenses, add up to less than the standard deduction, then it is usually more beneficial to claim the standard deduction.

Next steps

Finding a nursing home for a loved one can be a stressful process. While understanding the financial aspect and any potential payment options is a crucial part of that decision, it also helps to remember that there is support available. Whether you are looking for a nursing home, or want to talk through questions that you have, Senior Care Advisor can help by making recommendations for your loved one’s care and offering guidance on next steps.

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References

Internal Revenue Service. (2023, February 6). Topic No. 502 Medical and Dental Expenses.
Internal Revenue Service. (2021, October). Overview of the Rules for Claiming a Dependent.
Internal Revenue Service. (2018, October). About Form 2120, Multiple Support Declaration.
Internal Revenue Service. (2020, March 13). Understanding the Credit for Other Dependents.

Meet the Author

Chloe Clark

Chloe Clark is a copywriter for OurParents. She has an MFA in Creative Writing, with a background in education and publishing. She has over a decade’s experience in writing for print publications and websites.

Reviewed byDenise Lettau

The information contained in this article is for informational purposes only and is not intended to constitute medical, legal or financial advice or create a professional relationship between A Place for Mom (of which OurParents is a trademark) and the reader. Always seek the advice of your health care provider, attorney or financial advisor with respect to any particular matter and do not act or refrain from acting on the basis of anything you have read on this site. Links to third-party websites are only for the convenience of the reader; A Place for Mom does not recommend or endorse the contents of the third-party sites.

Are Nursing Home Expenses Tax Deductible?