Strategy: Turn misfortune into good tax fortune. Depending on your circumstances, you may qualify for a tax credit, a medical expense deduction or a charitable deduction—or all three!
Tax break No. 1. For starters, you can claim the dependent care credit paid to someone to care for you while your spouse works. (It’s a common misconception that this credit is limited to just child care.) Generally, the tax credit is equal to 20 percent of the first $3,000 in expenses. So, if you pay a nursing assistant $500 a week for a six-week stint, you can slice $600 (20 percent of $3,000) right off the top of your tax bill.
Tax break No. 2. You can also deduct the cost of qualified medical expenses relating to the care. That not only includes the cost of the nursing assistance, but items such as crutches or a hospital bed needed for rehabilitation. The caregiver doesn’t have to be a registered nurse. Remember, you can start deducting medical expenses only after they exceed 7.5 percent of your adjusted gross income (AGI).
Tax break No. 3. Finally, donate the medical items to charity when they’re no longer needed. For instance, you might give a hospital bed to a local health clinic. You can typically deduct the asset’s fair market value at the time it’s donated.
No restriction exists to claiming deductions for the same expenses (such as the bed, in this case), as long as they separately qualify under the tax rules.
- Small Business Tax Deduction Strategies No matches