Long-term care expenses quickly add up, but it is good to know that many long-term care expenses can be deducted from your taxes. Under tax law, expenses for medical care may be claimed as an itemized deduction if they exceed 7.5 percent of adjusted gross income. (Note that this threshold will rise to 10 percent of adjusted gross income in 2012.) The definition of medical expenses includes the cost of long-term care if a doctor has determined you are chronically ill. “Chronically ill” means you need help with activities like eating, going to the bathroom, bathing, and dressing, or you require substantial supervision due to a severe cognitive impairment.
Two important recent decisions by the U.S. Tax Court provide guidance on when caregiving services are deductible. In one decision, the court rules that payments to non-medical caregivers are still deductible as medical expenses; in the other, the court holds that a written agreement is required in order for a deceased woman’s estate to deduct care that her son allegedly provided her. To find out more, click here .