Secure medical deduction for nursing care

Even if you expect to itemize this year, it’s usually rather difficult to claim the itemized deduction for medical expenses. The deduction floor is higher for 2019. But every little bit helps. Case in point:  Suppose a family member who is ill or injured needs daily help.

Strategy: Hire someone to care for the individual. The wages you pay to this person count toward the medical expense deduction and could put you over the top.  Best of all, the IRS says that the caregiver doesn’t have to be a registered nurse or other medical professional. It can be anyone -even a relative or friend.

Here’s the whole story:  For 2019, you can deduct unreimbursed medical expenses to the extent they exceed 10% of your adjusted gross income (AGI).  The threshold was lowered by the TCJA to 7.5% of AGI for two years-2017 and 2018- before reverting to the 10%-of-AGI level for 2019 and beyond.

For instance, if you have an AGI of $100,000 in 2019 and incur $9,500 in reimbursed medical expenses, you get no deduction.

So make sure you nail down every last penny in deductible medical expenses. Accordingly, if you pay a helper to care for a dependent (say, your elderly mother) you can include the wages in your total medical expenses. It doesn’t matter if the helper has little or even zero nursing experience.

But if the helper performs other household chores (e.g., cooking, cleaning), you must apportion their wages. Only the part that is allocable to medical care is deductible as a medical expense.

Example: You hire a housekeeper in July to care for your mother and perform other house-hold duties. The housekeeper earns $2,000 a month and spends 75% of the time caring for mom. On these facts, 75% of the housekeeper’s wages for six months of the year, or $9,000 (75% of $12,000 in wages), count as a medical expense.

In Publication 502, Medical and Dental Expenses, the IRS says you can also deduct part of the amount paid for a helper’s meals. Furthermore, if you pay additional amounts for household upkeep because of the helper, you can include these extra amounts in your deductible medical expenses.

Tip: The Social Security and Medicare tax that you must pay as an employer that is attributable to nursing care is also deductible.

Small Business Tax Strategies (June 2019)