Tax Deductions for Alzheimer’s Care

There are numerous tax deductions available from the Internal Revenue Service (IRS) for out-of-pocket medical expenses related to Alzheimer’s care. This applies to families who are caring for a loved one with Alzheimer’s disease at home, or for a relative who is residing in assisted living or another long-term care setting for their Alzheimer’s care.

Medical costs related to Alzheimer’s care that you may be able to deduct on your tax return:

An individual with dementia incapable of caring for his or herself may be considered a dependent for tax purposes, and you may be allowed to itemize medical costs which have not been reimbursed by insurance. 

The list of allowable itemized expenses includes:

• Medical fees from doctors, hospitals, laboratories
• The list of allowed “medical fees” can cover personal care services, food and lodging at an assisted living community. A licensed healthcare professional has to certify in writing that the assisted living resident has “a severe cognitive impairment, such as Alzheimer’s disease, dementia or other form of irreversible loss of mental capacity that requires substantial supervision to be protected from threats to their health and safety”
• Home health care and visiting nurse agency fees related to medical care
• Prescription drugs costs
• Transportation to receive medical care
• Home modifications, such as handrails and shower grab bars
• Personal care items, such as disposable adult briefs

You may also be able to take advantage of the IRS Child & Dependent Care credit:

The IRS “Child and Dependent Care Credit” can include a loved one with dementia if you pay someone to care for them while you work or look for work. If eligible, you may be allowed a credit of up to 35% of qualifying expenses, depending upon your adjusted gross income. 

Tax preparation resources to help you take advantage of tax breaks for Alzheimer’s care:

• Be sure to ask your tax advisor whether your state offers tax credits for families caring for a loved one with dementia
• This website has additional information on the available tax deductions for all long-term care settings, including my free downloadable article: Tax Return Deductions for Long-Term Care Expenses
• AARP’s Tax-Aide Program offers free, individualized tax preparation (for both state and federal tax returns) for low to moderate income taxpayers. These services are offered at nearly 5,000 locations nationwide

Reference these IRS publications for current year details:

There are restrictions and thresholds in place, so be sure to consult with your tax advisor or accountant. You can also review these three IRS publications for details and specific deduction amounts for the current tax year:

• IRS Publication 501: Exemptions, Standard Deductions and Filing Information has information about claiming a person with dementia as a dependent. In order to receive tax breaks, a person with dementia must be claimed as a dependent on your tax return 
• IRS Publication 502: Medical and Dental Expenses has a complete list of allowable expenses
• IRS Publication 503: Child & Dependent Care Expenses has a list of allowable expenses if you are able to claim the “Child & Dependent Care Credit” on your federal income tax return
• Visit www.irs.gov for more information