Tax Rules for Family Caregivers

Tax Day isn’t until April 15, but it’s never too early to start preparing your tax return. Tax rules for family caregivers can mean you could deduct certain costs from your taxes. These tax exemptions can save you some hard-earned money, too, so it’s a smart idea to make sure you’re clued up on what dependency rules might apply to you.

There are certain eligibility criteria you'll need to fulfill to be able to deduct any caregiving costs from your taxes. If you’re wondering “can I write off my caregiving expenses on taxes,” see if you tick any of the boxes below:

Is the family member you cared for a U.S. citizen, U.S. national, U.S. resident, or a resident of Canada or Mexico?

These tax exemption rules only apply to these groups of people.

Will they be filing a joint return? Did the person you cared for have a gross income that was more than the 2021 exemption limit?

If you answered ‘yes’ to either of these questions, you are not eligible for deducting caregiving costs according to the dependency rules.

Have you paid at least 50% of the costs of a family member’s medical care?

This doesn’t just include costs of caring for your family member within your own home; you might have paid for them to live in assisted living or similar. Expenses, such as glasses, hearing aids, prescription drugs, mobility aids, and so on can be included. However, these costs cannot include food or accommodation costs that are not medically related.

They should also not have been covered by private insurance. The medical costs should total more than 10% of your annual gross income, or 7.5% for those aged 65 or older.

Is anyone else claiming on behalf of your family member?

If there are multiple caregivers or tax dependents, only one person can claim. For example, if you share costs with siblings, you will need to file a Multiple Support Declaration provided all parties agree.

Is the person you care for on a Medicaid waiver and do you live with the patient receiving home care service?

If so, then your income as a caregiver is also exempt from federal and state taxes, according to this special tax exemption.

Have Questions? Ask Your Financial Advisor

Please note that while we do everything we can to support PCAs in Minnesota, we are not financial planners or accountants. It’s always best to seek advice from a tax specialist before you make your deductions. Follow us on social media for more PCA tips and advice! We are on Facebook and Instagram.