Tax help for dementia caregivers

Dementia care costs a lot: adult day care, aides at home, memory care, home changes and many doctor visits. Taxes will not cover these costs, but a few rules can give some money back. See what dementia care costs and what Medicare covers.

This page explains the main federal tax breaks for caregivers, the changes that start with 2026 tax returns, and a few Virginia rules. Tax rules are detailed and change often. Use this page to know what to ask, then check with a tax preparer or the IRS before you file.

The credit for paying for care while you work

The child and dependent care credit helps people who pay someone to look after a family member so they can work or look for work.⁴

Who counts as a "qualifying person"

The credit is not only for children. It can also cover:¹

• Your spouse who cannot care for themselves and lived with you for more than half the year.
• Another adult, such as a parent, who cannot care for themselves, lived with you for more than half the year, and is your dependent.

"Cannot care for themselves" means the person cannot dress, clean or feed themselves because of a physical or mental condition. It also covers someone who needs constant watching so they do not hurt themselves or others.¹

A parent with too much income to be your dependent may still count. The IRS allows this when the only reason they are not your dependent is their income, a joint return, or a similar technical rule.¹

What care counts

• Paid help at home, such as an aide who watches your parent while you are at work.
• Adult day care. Care outside your home can count for an adult if they spend at least 8 hours a day in your home. The center must follow state and local rules and care for more than six people.^1,2 Learn more about adult day care.
• Food, lodging, clothing and entertainment do not count.⁴

You can pay a relative, such as an adult brother or sister. But you cannot count payments to your spouse, to your own child under 19, or to anyone you claim as a dependent.¹

What changes for 2026

For 2026 tax returns (filed in 2027), the credit gets larger for many families. The most care costs you can count stay the same: $3,000 for one person or $6,000 for two or more.³ What changes is the percentage you get back.^2,3

In plain numbers: a married couple with $100,000 of income who pays $3,000 or more for a parent's adult day care could get about $1,050 back for 2026. For 2025, the same couple would get about $600.^1,2

Rules that trip people up

• You must have earned income, such as wages or self-employment pay. If you are married, you both usually need it. A spouse who cannot care for themselves is treated as having a small monthly income, so a working spouse caring for a husband or wife with dementia can still qualify.¹
• Retired caregivers usually cannot use this credit, because pension and Social Security income are not earned income.¹ Look at the medical expense deduction instead.
• You must list the care provider on Form 2441, with their name, address and tax ID number. Ask for this early. Form W-10 can help.^1,4
• Most married people must file a joint return to claim it.⁴

See working while caregiving for help with job leave and flexible work.

Dependent care FSAs at work

Some employers offer a dependent care flexible spending account (FSA). You set aside part of your pay before tax and use it for the same kinds of care. Starting in 2026, the most you can set aside rose from $5,000 to $7,500 a year ($3,750 if married filing separately).⁵

The rules for who counts and what care counts are basically the same as for the credit.⁵ You cannot use the same dollars twice. Money you get through the FSA lowers the $3,000 or $6,000 you can use for the credit.¹ You usually sign up once a year, so plan ahead.

The medical expense deduction

Many dementia care costs count as medical expenses. You can deduct costs for yourself, your spouse and your dependents. You can also include a parent who would be your dependent except that their income was too high.⁶

There are two catches. You must itemize your deductions instead of taking the standard deduction. And you can deduct only the part of your costs that is more than 7.5% of your AGI.⁶ For example, with $60,000 of income, the first $4,500 of medical costs does not count. Large care bills can pass that line quickly.

What can count

• Long-term care for a person who is "chronically ill." This includes someone who needs close supervision because of severe memory and thinking problems. A licensed health care practitioner must have certified this in the past 12 months, and the care must follow a written plan of care.⁶
• Nursing homes and similar places. If the main reason for the stay is medical care, the whole cost can count, including meals and lodging. If not, only the care part counts.⁶ Ask an assisted living or memory care community for a written statement that breaks out the care costs.
• Help at home with personal and nursing care, such as bathing, giving medicines or changing dressings. If the aide also cleans or cooks, only the care part counts.⁶ See in-home care.
• Home changes made for medical reasons, such as ramps, grab bars, bathroom railings and wider doorways. If the change raises your home's value, you must subtract that amount.⁶ See making the home safer.
• Trips for medical care. You can count gas and oil, or use the IRS medical rate per mile, plus parking and tolls.⁶ The rate was 21 cents a mile for 2025. For 2026 it is 20.5 cents through June and 23.5 cents from July.¹¹
• Medicare Part B and Part D premiums.⁶
• Long-term care insurance premiums, up to a yearly limit based on age. For 2025, the limit was $4,810 per person aged 61 to 70 and $6,020 for age 71 and older.⁶ See long-term care insurance.

Keep receipts, bills, mileage notes and the doctor's letter in one folder or box all year.

Claiming a parent or spouse as a dependent

If you help pay for a parent's life, they may count as your dependent as a "qualifying relative." In general:⁷

• Relationship: Parents and grandparents do not have to live with you.
• Income: Their own gross income must be under a set limit. For 2025 it was under $5,200.
• Support: You must pay for more than half of their support for the year.

When a parent is your dependent, you may get the credit for other dependents, worth up to $500 per person.^7,8 It phases out only at high incomes.⁸

You may also be able to file as head of household, which has lower tax rates than filing single. If you are unmarried, a dependent parent does not have to live with you. You must pay more than half the cost of their main home for the year. A rest home or home for older adults can count as that home.⁷

When several brothers and sisters share the cost and no one pays more than half, a multiple support agreement can let one of them claim the parent.⁷ The others sign a form agreeing to it. Talk this over at a family meeting before tax season.

Health savings accounts (HSAs)

An HSA is a savings account for health costs that comes with a high-deductible health plan. Money goes in before tax, grows tax-free, and comes out tax-free for medical costs.⁹

• For 2026, you can put in up to $4,400 for yourself or $8,750 for a family. People 55 and older can add $1,000 more.⁹
• You can use HSA money for medical costs of your spouse and dependents.⁹
• Once you enroll in Medicare, you can no longer add money. You can still spend what is there.⁹
• After 65, you can use HSA money tax-free for Medicare premiums, but not for Medigap (Medicare supplement) premiums.⁹

A new deduction for people 65 and older

From 2025 through 2028, people 65 and older can take an extra deduction of up to $6,000 each, or $12,000 for a married couple when both qualify.¹⁰ It is added on top of the standard deduction. It gets smaller once income passes $75,000, or $150,000 for married couples filing jointly.¹⁰

This can help both the person with dementia and an older spouse who is the caregiver.

If you hire an aide yourself

If you hire a caregiver directly, you may be a household employer. For 2026, if you pay one worker $3,000 or more in cash wages, you usually owe Social Security and Medicare taxes. Federal unemployment tax may apply if you pay $1,000 or more in any three-month period. You report these taxes on Schedule H.¹²

A worker from an agency that controls the work is usually not your employee. Wages you pay your own spouse or parent are generally not counted for these taxes.¹²

Virginia notes

Virginia starts with your federal numbers, then makes its own changes.¹³

• Child and dependent care deduction: If you qualify for the federal credit, you can deduct the same care costs on your Virginia return, up to $3,000 for one person or $6,000 for two or more. Use the costs, not the federal credit amount.¹³
• Age deduction: People 65 and older can deduct up to $12,000 each. For most people, it shrinks by $1 for every $1 of adjusted income above $50,000 (single) or $75,000 (married). Social Security is left out of that income figure. People born on or before January 1, 1939, get the full amount regardless of income.¹⁴
• Long-term care insurance premiums: Virginia allows a deduction, but only if you did not deduct those premiums on your federal return that year.^13,14
• Itemized medical costs: Virginia generally follows your federal Schedule A.¹³
• Livable Home Tax Credit: Virginia homeowners who make a home more accessible may get a credit of up to 50% of the cost, with a top amount of $6,500. The state has a set yearly budget, so credits may be cut back when many people apply. Contact the Virginia Department of Housing and Community Development at 804-371-7000.¹⁵

As of October 2026, these rules apply to recent tax years. Check Virginia Tax for the year you are filing.

When the person with dementia can no longer do their taxes

Doing taxes often gets hard early in dementia. While the person can still take part, make sure a durable power of attorney for finances covers tax matters. Gather last year's return and a list of income sources and accounts. Watch for missed filings and fake "tax refund" offers; see scams and financial abuse. An elder law attorney can explain how taxes fit with Medicaid planning and gifts.

Free help with your taxes

• VITA (Volunteer Income Tax Assistance) gives free help from IRS-certified volunteers, mainly to people with low to moderate income, disabilities or limited English.¹⁶
• TCE (Tax Counseling for the Elderly) focuses on people 60 and older. Many sites are run by AARP Foundation Tax-Aide.¹⁶
• Call 800-906-9887 to find a site, or 888-227-7669 for AARP Tax-Aide.¹⁶

Bring the care provider's tax ID, receipts, a doctor's letter about the need for care, and last year's return. If money worries are wearing you down, see caregiver stress. If you ever feel you cannot go on, call or text 988 any time.

Common questions

Can I claim the dependent care credit if I am retired?

Usually not. The credit is for care that lets you work or look for work, and you need earned income such as wages.¹ Retired caregivers should look at the medical expense deduction instead.

My mother lives in her own apartment. Can she be my dependent?

Possibly. A parent does not have to live with you. Her income must be under the yearly limit, and you must pay more than half of her support.⁷ She would not count for the dependent care credit, though, because that credit needs the person to live with you for more than half the year.¹

Does Medicaid or VA help change my taxes?

Costs paid by Medicaid, the VA or insurance are not your costs, so you cannot deduct them. Only what you pay out of pocket and are not paid back for counts.⁶ See VA benefits and what dementia care costs.

Education only. This page is general information written from the sources listed. It is not medical, legal or financial advice and does not replace a doctor, therapist or lawyer who knows your situation. How we write and check pages.