Nursing Home Expense Tax Deductions

Nursing homes often combine homestyle benefits with necessary medical care.

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Typically, you can deduct nursing home expenses for yourself, your dependents or your spouse. Nursing and retirement home expenses are considered medical expenses by the Internal Revenue Service. However, the care must meet certain qualifications before you can claim the full amount as an expense, and you must itemize your deductions to gain any benefit.

Nature of Expense

If the patient resides in the home because he needs medical care, you can include not only the cost of his medical care but also the cost of his room and meals. If his reasons for entering the home do not involve the need for medical care, you cannot include the portion that covers his lodging and meals. Should he receive medical care while residing in the home, you can claim those costs as a deductible expense, along with any nursing services that might be provided.

Deducting Dependent Expenses

To claim medical expenses, the person for whom they are paid typically must qualify as a dependent on your income tax return, although requirements vary for dependents who are supported by more than one taxpayer. The person incurring the nursing home expenses needs to be your dependent either when you paid the bill or when he incurred the expense. Your dependent needs to reside in Mexico, the U.S. or Canada, or be a U.S. national or citizen. Dependents can be qualifying children or qualifying relatives, a category that also includes unrelated individuals who resided with you all year. Temporary absences for medical care, including stays in nursing homes, are irrelevant when determining whether residency requirements are met.

Multiple Support

It might happen that no one taxpayer provides more than half of the support for a qualifying relative. As an example, four siblings might each pay 25 percent of the cost of supporting their mother. Because IRS rules state that you must pay more than 50 percent of the dependent’s support, none of the siblings is entitled to claim his or her mother as a dependent. However, if they choose to enter into a multiple support agreement, one of them can claim the 25 percent he paid for her nursing home expenses; the remaining three cannot claim any portion on their tax returns. If the four siblings contributed equally to their mother’s other support, but only one of them paid for all of her medical expenses, he is entitled to claim all of nursing home expenses.

Claiming the Deduction

Medical expenses are computed on lines one through four of the Form 1040 Schedule A. You must first complete your Form 1040 through line 38, which gives your adjusted gross income. You can deduct only the portion of your allowable medical expenses that exceed 7.5 percent of your adjusted gross income.