Are home health care costs tax deductible?

That's a really good question. I suggest posing the question to not just one tax-savvy CPA, but asking two that are registered with the IRS. And make sure they're registered agents with the IRS.

There are also some savvy CPAs in the Bogleheads investment forum (bogleheads.org) who might be able to provide free advice.

When I started caring for my mom I consulted an eldercare attorney. He looked over her finances and advised that I sell all her stock. I asked why. He said for simplicity's sake in managing her finances. I protested that she had a lot of capital gains and was going to have to pay taxes on all that. He claimed that her care costs could be deducted as medical expenses and would cancel out the capital gains.

I didn't take his advice, partly because I wasn't convinced that there would be enough care expenses at that point that would qualify as deductible medical expenses in order to cancel out the capital gains, and also because she was getting good dividends.

After her first year in memory care the memory care's accounting department sent me a statement that reported that none of her astronomical monthly fees for the facility were technically tax deductible as medical expenses via IRS rules. I was stunned.

I eventually moved her to another memory care, very similar to the first, but with better staffing and care. After her first year there their accounting department sent me a statement saying that 25 percent of her monthly fees were tax deductible medical expenses under IRS rules. Why the difference in the deductibility of the two facilities' fees? And why only 25 percent? I have no idea.

I've read the IRS rules and they left me scratching my head.

That's why I suggest consulting two CPAs with applicable experience. Not every CPA is clued-in to all the fine points. And the cost of two consultations is going to be a lot less than what you'll pay if you get in trouble with the IRS and they deny the deduction.

But check out the forums on Bogleheads.org. I'd be surprised if you don't get some good advice there.

You’re asking a really good (and very common) question—and you’re right, it is a bit of a gray area depending on how the care is classified and documented. That said, yes, home health care costs can be tax deductible under certain conditions. It sounds like your situation might qualify, especially if your wife has a diagnosed cognitive impairment (like Alzheimer’s or dementia) and the care is considered medically necessary.

Here’s what I’ve learned based on similar experience:

Qualified long-term care services (like assistance with activities of daily living or supervision for cognitive impairments) can be deductible as medical expenses under IRS Publication 502.

The caregiver’s time must be related to health care, not household tasks like cooking or cleaning (though if those are minor and incidental, it can still count).

You need a care plan prescribed by a licensed health care provider—this is key. A doctor or nurse must document that home care is necessary.

The expenses must exceed 7.5% of your adjusted gross income (AGI) to be deductible on your taxes.

Keep detailed records—dates, hours, invoices, and care tasks performed.

Also, if you’re using retirement funds to cover these costs, you might be able to offset some of that tax liability with the medical deduction—but that depends heavily on your income level and how everything’s structured.

If things get complicated, you could also use tools like Counterforce Health to help organize documentation or appeal care-related denials. They focus more on insurance, but I’ve seen folks use it to track out-of-pocket care expenses too.

Definitely bring all this to your tax advisor, but it sounds like you’re on the right path. Wishing you and your wife strength—what you’re doing takes a lot, and it really matters.