A senior man enjoying coffee with his female caregiver
iStock_Dean Mitchell_Senior Man with Female Caregiver

Tax Breaks for Clients with Caregivers

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If your client employs someone to care for a spouse or dependent with disabilities, they may be entitled to certain medical deductions. In the final installment in this series, tax guru Julian Block discusses the tax breaks available to these clients and breaks down the guidelines outlined by the IRS. 

Dec 2nd 2021
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If you’re just joining us, parts one and two of this series covered medical-expense deductions for people with disabilities and IRS restrictions on deductibility of costs associated with schooling children who have physical or mental disabilities. Part three discussed the profit exclusions that allow home sellers to avoid federal and state income taxes on sizable portions of their profits from sales of their principal residences and when sellers with disabilities can avail themselves of a special break.

This article, the final of this series, will focus on other tax breaks that lawmakers crafted specifically for those with disabilities.

Child and dependent care credit. Many people mistakenly believe that they can avail themselves of the credit only if they hire someone to care for their children under the age of 13 or other dependents. However, the credit also applies when the person requiring care is a spouse or a dependent, regardless of age. The key requirement is that the spouse or dependent is physically or mentally “incapable of self-care.” 

For credit purposes, this means an individual who has mental or physical disabilities that prevent her from dressing or feeding herself or tending to personal hygiene without the help of someone else or that require continual attention to prevent her from injuring herself or others.

Suppose your client’s grandfather, who otherwise enjoys good health, has an injury, either permanent or temporary, that requires him to use a wheelchair or stay in bed. The IRS will acknowledge this as a disability. The IRS will also consider suicidal tendencies or other dangerous tendencies to be disabilities. 

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