Deducting Care Expenses Paid For Another Person

With many of our senior clients, someone other than the senior (e.g. – the child of the senior) is paying for the expenses associated with their care. Individuals who pay for the care of another may be entitled to deduct the cost of care on their tax return if they meet four requirements:

First, they must pay more than one-half of the recipient’s “support” for the calendar year.

“Support” is determined yearly and includes the following: (a) the fair rental value of lodging; (b) the cost of clothing, education, medical and dental care, gifts, transportation, church contributions, and entertainment and recreation expenses; and (c) a proportionate share of the expenses incurred in maintaining the family as a whole that can be directly attributable to each individual, such as food, but is not attributable to the overhead of the home, which may include electricity, repairs, and taxes.

Second, the recipient must have a special relationship to the payer (that is, is a parent or child).

Third, the recipient must have filed separately from her spouse.

Finally, the dependent must be a citizen, national, or resident of the United States or must be a resident of Canada or Mexico at some time during the calendar year in which the tax year of the taxpayer begins, or is an alien child adopted by and living with a U.S. citizen or national as a member of her household for the entire tax year.

See IRC §152(a), Treas. Reg. §1.213-1(e)(3), and Treas. Reg. §1.151-1. Before deducting any expenses our your tax returns, please seek advise from a tax professional who is familiar with these rules.