Tax Breaks for Caregivers: What You Can Deduct (And How to Save on Mom’s Home Sale)

Caring for a loved one can be one of the most rewarding things we do, but let’s be honest—it can also be expensive! The good news? The IRS does offer some tax breaks that can help ease the financial burden. While I’m not a CPA (so be sure to check with your favorite tax pro), here are a few deductions caregivers might be able to claim.

Caregiving Expenses That May Be Deductible

• Medical Expenses – If you’re covering out-of-pocket medical costs for Mom, including doctor visits, prescriptions, in-home nursing, or even certain home modifications (like a wheelchair ramp or walk-in tub), you might be able to deduct those expenses—provided they exceed 7.5% of your adjusted gross income.
• Dependent Care Credit – If Mom qualifies as your dependent and you pay for adult daycare or in-home care while you work, you may be eligible for this credit.
• Household Expenses – If Mom moves in with you and you’re covering a significant portion of her living expenses (food, utilities, etc.), those costs might contribute toward claiming her as a dependent.
• Aging-in-Place Safety Modifications – The cost of installing grab bars, stairlifts, widened doorways, or other safety improvements to accommodate Mom’s mobility issues may qualify as a deductible medical expense.
• Dementia and Alzheimer’s Care – If Mom has dementia, expenses related to memory care facilities, home health aides, or specialized treatment programs may be deductible if deemed medically necessary.
• Respite Care – Taking a break as a caregiver is crucial. If you pay for short-term respite care so you can recharge, those costs may qualify as a deductible expense.

Selling Mom’s Home: How to Avoid Capital Gains Taxes

If Mom is moving in with you or into a senior community, selling her home is often the next step. To avoid unnecessary taxes, here’s what to keep in mind:

• Primary Residence Exclusion – If Mom has lived in her home for at least two of the past five years, she can exclude up to $250,000 in capital gains ($500,000 if married filing jointly).
• Step-Up in Basis – If Mom holds onto the home until her passing, heirs may benefit from a step-up in basis, meaning they inherit the home at its current market value—reducing or even eliminating capital gains taxes if they sell.
• Medicaid Considerations – If Mom may need Medicaid assistance, selling her home could impact her eligibility. Consulting a financial planner can help avoid complications.

As always, tax laws are complex, so consulting with a CPA or tax professional is the best way to ensure you’re making the most of available deductions and avoiding surprises. I have an extensive network of professionals who can help you from CPA’s and tax attorneys who specialize in senior care, to Medicaid Guidance Counselors, Dementia Practitioners or household organizers|downsizers|estate-salers and contractors who focus on aging-in-place renovations.  Reach out to me at Jude@JudeCreamer.com if I can suggest a professional to assist you with your particular area of need.  Happy tax planning!