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My 85yo wife is home bound, diagnosed with dementia, CKD3B, TypeII diabetes and diabetic neuropathy below both knees. Weve hired "HomeCareAgencyX"at $37/hr. Agency X performs the services described by the IRS as a Statutory Companion-Sitter. What, if any, of the dollars paid AgencyX for their Companion -Sitter are deductible?

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This is a question for your accountant. We do not - nor do we want to know - the ins and outs of your personal finances and income taxes. Ask the person who prepares who taxes. If you don't have an accountant, it's time to get one.
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kargivr May 2023
I seem to have opened a festering wound. I thought I made the question general enough to make clear I was inquiring about viewers experience with the law...perhaps even a viewer steeped in the vagaries of pecuniary complexities related to finance and the aged and the tyrannical over-reach of mother government :)
Lighten up...you'll feel better.
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I think your a little late in filing taxes for this year. But this is a question for your tax preparer. Like you we on this forum are Caregivers.
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Have a look at IRS publication 502, page 11. Read the definitions and note the requirements for a care plan.

I’m guessing you’d base it on Cognitive impairment requiring protective supervision.

https://www.irs.gov/pub/irs-pdf/p502.pdf

It is probably deductible, within the limitations of medical expenses as part of using itemized deductions.
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First question: Are you paying the agency or the companion-sitter? If you are paying the companion-sitter, they are considered as self-employed even if they are referred to you by the agency. You are their employer and are responsible for paying their social security, providing them with a W-2 as your employee, etc. If you are paying the agency, the sitter is apparently employed by the agency and you don't have to worry about paying their social security, etc. Here's the IRS statement about companion-sitters: "Companion sitters are individuals who furnish personal attendance, companionship, or household care services to children or to individuals who are elderly or disabled. A person engaged in the trade or business of putting the sitters in touch with individuals who wish to employ them (that is, a companion sitting placement service) won't be treated as the employer of the sitters if that person doesn't receive or pay the salary or wages of the sitters and is compensated by the sitters or the persons who employ them on a fee basis. Companion sitters who aren't employees of a companion sitting placement service are generally treated as self-employed for all federal tax purposes. However, the companion sitter may be an employee of the individual for whom the sitting services are performed; see Publication 926, Household Employer’s Tax Guide."

You definitely need to consult a tax professional about deductibility of expenses for a companion-sitter. If the companion-sitter is hired because your wife cannot safely be alone while you are working, there is the "child and dependent care credit" which can be up to $3,000 off your taxes. https://www.irs.gov/taxtopics/tc602 That credit is only available if you are working, and the expenses cannot be counted in your itemized deductions also (i.e., can only count the expenses once).

To claim companion-sitter expenditures as a medical deduction you would have to itemize; you can only count medical expenses in excess of 7.5% of your income; and you need to be able to separate out what would be considered "medical" services from non-medical services such as doing dishes or laundry. Services such as help with bathing, dressing, or mobility are considered medical from an IRS perspective. Quoting from the IRS manual, "You can include in medical expenses wages and other amounts you pay for nursing services. The services need not be performed by a nurse as long as the services are of a kind generally performed by a nurse. This includes services connected with caring for the patient's condition, such as giving medication or changing dressings, as well as bathing and grooming the patient. These services can be provided in your home or another care facility.
Generally, only the amount spent for nursing services is a medical expense. If the attendant also provides personal and household services, amounts paid to the attendant must be divided between the time spent performing household and personal services and the time spent for nursing services." For medical expense deductions, see:
https://www.irs.gov/publications/p502#en_US_2022_publink1000178989
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Go to www.bogleheads.org and ask this question.
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I seem to have opened a festering wound. I thought I made the question general enough to make clear I was inquiring about viewers experience with the law...perhaps even a viewer steeped in the vagaries of pecuniary complexities related to finance and the aged and the tyrannical over-reach of mother government :)
Lighten up...you'll feel better.
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I seem to have opened a festering wound. I thought I made the question general enough to make clear I was inquiring about viewers experience with the law...perhaps even a viewer steeped in the vagaries of pecuniary complexities related to finance and the aged and the tyrannical over-reach of mother government :)
Lighten up...you'll feel better.
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newbiewife May 2023
I have no idea about what you mean by opening a festering wound, nor why you repeated this same answer multiple times, nor why you are telling respondents to lighten up when they are just trying to be helpful. I, and several others, thought you were asking a genuine question. Several of us tried to provide concrete answers based on our understanding of IRS regulations around deductions. Others suggested you check with a tax accountant as most of those who post on this caregiver forum don't have the knowledge to answer on a topic with complex legal implications.
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