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My spouse has dementia and requires in-home care. Is this expense deductible?

You can take a medical expense deduction for out-of-pocket medical expenses not covered by insurance if you itemize deductions on Schedule A. This would include qualified in-home health care services. The key to claiming the maximum legal deduction is that these are “Qualified Long-Term Care Services” pursuant to a plan of care prescribed by a licensed health care practitioner. If the care is provided so that you can go to work, the Dependent Care Credit may be of greater benefit.

 Medical expenses are not always deductible and are never fully deductible. For 2017 and 2018, You can only deduct unreimbursed medical expenses to the extent that they exceed 7.5% of your Adjusted Gross Income (AGI). This means that first you must subtract 7.5% of your AGI from your total medical expenses and any remainder can be included in itemized deductions.  Starting in tax year 2019, only medical expenses that exceed 10% of AGI will be deductible.

 See IRS Publication 502 for detailed information regarding what is considered a medical expense and a definition of “Qualified Long Term Care Services” in this situation.