Suppose your working spouse is injured and put out of commission for a while.
Strategy: Turn misfortune into tax savings. Depending on your situation, you might qualify for one, two or even three tax breaks.
Tax break #1: For starters, you may claim the dependent care credit for the cost of caring for a one spouse while the other one works. It’s a common misconception that the credit is limited to child care expenses. Generally, the credit is equal to 20% of the first $3,000 of expenses. Therefore, if you pay a nursing aide $500 a week for six weeks, you can slice your 2017 tax bill by $600.
Tax break #2: In addition, you may qualify for a medical expense deduction for costs incurred to care for your injured spouse. Qualified expenses include nursing care and things like crutches or a rented hospital bed needed for rehabilitation. Note that the caregiver doesn’t have to be a registered nurse. Reminder: Under the current rules, you can only deduct unreimbursed medical costs to the extent they exceed 10% of your adjusted gross income for 2017.
Tax break #3: Finally, you can donate medical items to a charity when they’re no longer needed. For instance, you might give the crutches to a local health clinic. Typically, you may deduct the item’s fair market value on the date of the donation.
Tip: There’s no prohibition against multiple tax benefits for the same expense as long as it qualifies separately under the rules.