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 Return to Eldercare FAQ List
I have heard that I can get a personal tax break to help with my home health aide expenses? Does this apply if I hire a companion?
There are two popular strategies that families use to minimize their personal income taxes and help with dependent care expenses. If the person receiving the care is a dependent for tax purposes, the working spouse (or other legally responsible adult claiming the dependent on a US Income Tax Return) may utilize a flexible spending plan (cafeteria plan) offered by their employer for the dependent care expenses. Your human resources department can provide you with plan details. Another strategy is the Child/Dependent Care Credit available to many taxpayers. This credit can directly reduce the taxpayer's income taxes by between $480-$1,465 a year.
To be eligible for any dependent care tax breaks, the family has to report the wages paid to the home health aide and remit the necessary employment taxes. Many families find that the tax break offsets the cost of the payroll taxes for the aide or companion, thus easing the financial burden of tax compliance.
Often, the in-home eldercare services are paid for by the person receiving the care. In certain circumstances, the in-home eldercare may qualify as a medical expense. A qualified personal tax advisor should be consulted to determine whether these expenses are deductible on an income tax return.
For More Information contact HomeWork Solutions, Inc.
at 1-800-NaniTax or e-mail and submit a question.
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