Alzheimer’s Disease and Taxes: What You Need to Know

Before you send your tax returns to the IRS, make sure you get the tax-savings you deserve. As a caregiver for a loved one with dementia, you may qualify for tax deductions and credits.

Tax deductions

The cost of Alzheimer care is high. Because caregivers pay for most care expenses out of pocket, they may be eligible for some tax deductions.

Deductible caregiving costs may include:

  • Medical care, including nursing care
  • Transportation essential to medical care
  • In-home care, such as physical therapy
  • Personal care items, such as disposable briefs and special foods
  • Nursing home care
  • Assisted living or other residential care
  • Home modifications such as grab bars or wheel chair ramps

A caregiver can take federal income tax deductions only if the person with dementia has been certified as chronically ill. This certification must have been made by a licensed health care practitioner within the last 12 months.
Long-term care services must be given under a prescribed plan of care. Be sure to keep records about your payment for services, and save certifications and plans of care. For more details on deducting caregiving costs, see IRS Publication 502, Medical and Dental Expenses.

Tax credits

If you paid someone to care for a child or a dependent so you could work or look for work, you may be able to reduce your tax by claiming the “Child and Dependent Care Credit” on your federal income tax return.

The credit is a percentage of the amount of work-related child and dependent care expenses you paid to a care provider. The credit can be up to 35 percent of your qualifying expenses, depending on your income. There are eligibility requirements to receive this credit. For more details, see IRS Publication 503, Child and Dependent Care Expenses.

Certain states have additional tax deductions or tax credits to provide financial relief to caregivers. These tax programs build on the federal tax credit, which reduces the amount of income taxes a family owes. Each state program differs by name and eligibility requirements. Consult the table on our Tax Deductions and Credits fact sheet to see if your state offers this type of credit or deduction.

Charity check-off boxes on state income tax forms

When filing your state tax form, you may be able to help fund Alzheimer’s disease research by making a donation with your return. Some state forms provide check-off boxes to contribute to charities involved in medical research.

More information
  • IRS Web site: http://www.irs.gov/
  • IRS Tax Helpline: 1.800.829.1040
  • Tax Counseling for the Elderly (TCE) Helps people age 60 and older. Trained volunteers from non-profit organizations provide free tax counseling and basic income tax return preparation for senior citizens. Many of the volunteer counselors come from AARP’s Tax-Aide program. To find one near you, call AARP at 1.888.227.7669 or visit AARP’s Web site.

This information does not constitute financial, legal or tax advice. The determination of how the tax laws affect a taxpayer is dependent on the taxpayer’s particular situation. Taxpayers should seek help from a competent tax professional for advice about the proper application of the law to their situation.

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