Month: December 2023

As tax season approaches, a critical decision for taxpayers, particularly seniors and caregivers managing long-term care expenses, is whether to opt for the standard deduction or to itemize their deductions. This choice can significantly impact taxable income and overall tax liability. In this article, we will explore the intricacies of both options, focusing on their pros and cons, dollar amount thresholds, and the considerations involved. This article provides a comprehensive understanding that will help you learn whether taking the standard deduction or itemizing your deductions is best for your situation next tax season.

Understanding standard deductions

First, we’ll explain the standard deduction and then compare it to itemized deductions.

What is the standard deduction?

The standard deduction is essentially a portion of your income that is not subject to tax, thereby reducing your overall tax liability. This amount varies based on your filing status — whether you are single, married filing jointly, head of household, or married filing separately. The standard deduction is periodically adjusted for inflation, making it crucial to know any changes to the current year’s figures.

Rules and dollar amounts for the standard deduction

The rules for standard deductions are straightforward: Taxpayers are entitled to this deduction without the need to itemize or detail their expenses. The specific dollar amounts vary. For instance, for 2023, the standard deduction for single filers is $13,850, and for married couples filing jointly, it is $27,700. This variation acknowledges the different financial burdens and responsibilities of each filing status.

Advantages of the standard deduction

One of the primary advantages of the standard deduction is its simplicity. It eliminates the need to keep detailed records and receipts throughout the year. Additionally, in certain cases, the standard deduction might offer a higher deduction amount than itemizing, particularly for individuals or households with fewer deductible expenses.

Drawbacks of the standard deduction

The standard deduction isn’t always the most beneficial choice. It may not provide the most tax savings for those with considerable deductible expenses that exceed the standard deduction amount. This scenario is particularly relevant for seniors or caregivers with high medical and long-term care costs.

Ideal candidates for the standard deduction

The standard deduction is ideally suited for individuals and families whose deductible expenses do not surpass the standard deduction amount. It’s also a practical choice for those who prefer a simpler, more straightforward tax filing process. Seniors without substantial medical expenses or caregivers with minimal deductible costs often find this option more advantageous.

Understanding itemized deductions

Now, let’s take a look at what it means to itemize your taxes.

What does it mean to itemize taxes?

Itemizing deductions involves listing each deductible expense you have incurred throughout the year. This method can lead to a larger total deduction than the standard deduction but requires detailed recordkeeping. Itemized deductions can include various expenses, such as medical and dental expenses, some home modifications, state and local taxes, mortgage interest, and charitable contributions. 

Depending on your situation, you may be able to itemize other payments, such as nursing home costs. Check with your tax preparer well ahead of tax time to understand if you can do this in your situation.

Rules and dollar amounts for itemizing

The rules for itemizing are more complex than for the standard deduction. Taxpayers must have proof of each expense they claim, such as receipts or invoices. The IRS also sets specific thresholds for certain deductions, like medical and dental expenses, which must exceed 7.5% of your adjusted gross income (AGI) in 2023 to be deductible. For seniors and caregivers, long-term care expenses can be a significant component of itemized deductions, often making it worthwhile to itemize if these expenses are substantial.

Benefits of itemizing deductions

Itemizing can be highly advantageous for individuals with significant deductible expenses. It often results in a larger overall deduction than the standard deduction, leading to greater tax savings. This is particularly true for taxpayers with high medical costs, substantial mortgage interest payments, or large charitable donations.

Drawbacks of itemizing

The primary drawback of itemizing is the need for meticulous recordkeeping throughout the year. It can be a time-consuming and complex process, requiring organization and an understanding of what expenses are deductible. Additionally, itemizing is subject to audit risk, meaning that if the IRS questions the deductions, the taxpayer must provide adequate documentation to support each claim.

Practical scenarios

Here are two examples of situations where taxpayers take the standard deduction and itemize their taxes. Remember that your situation is unique, so you’ll need to check with your trusted tax professional, but these scenarios can help paint the picture of the two options.

Scenario 1: Opting for the standard deduction

Consider the case of Mr. Anderson, a retired senior citizen. He lives in a paid-off home and has minimal health care costs thanks to comprehensive insurance. His primary expenses are basic living costs and occasional charitable donations. Mr. Anderson’s total of these itemized expenses does not exceed the standard deduction amount for his filing status. By opting for the standard deduction, he simplifies his tax filing process and maximizes his tax benefits without requiring extensive recordkeeping.

Scenario 2: Benefits of itemizing deductions

Contrastingly, take the example of Ms. Bennett, who is a caregiver for her elderly mother. Her mother has significant long-term care expenses, including home care services and numerous medical bills not covered by insurance. Ms. Bennett, who covers these costs, finds that these expenses far exceed the standard deduction threshold. By itemizing, she can claim these substantial expenses, significantly reducing her taxable income. Despite the detailed documentation required, the financial benefit of itemizing in her situation is clear.

Should you take the standard deduction or itemize your taxes?

Choosing between the standard deduction and itemizing is a decision that should be made after careful consideration of one’s personal financial situation. For some, like those in the first scenario, the standard deduction offers a straightforward, beneficial approach to tax filing. Others, like the other scenario, find more value in itemizing, especially when significant deductible expenses are involved.

It’s crucial to stay informed about the current tax laws and standard deduction amounts, as these can change and impact your decision. Consulting with a tax professional can provide personalized advice tailored to your specific circumstances. By understanding the advantages and drawbacks of each option and evaluating your financial situation, you can make the choice that best suits your needs, ensuring a more efficient and beneficial tax filing experience.

As the population ages, many older adults explore innovative financial solutions to manage their long-term care needs. Among these solutions is a reverse mortgage, a type of loan that allows homeowners to convert part of their home equity into cash. This article will delve into how to use a reverse mortgage to pay for long-term care expenses.

Understanding reverse mortgages

A reverse mortgage is a loan available to homeowners who are 62 years or older that enables them to convert part of the equity in their home into cash. Unlike a traditional mortgage, where the homeowner makes monthly payments to a lender, in a reverse mortgage, the homeowner receives payments from the lender, and the loan is not required to be paid back until the home is sold or vacated. 

It’s important to note that one of the requirements of a reverse mortgage is that at least one borrower must remain living in the home. If the funds are being used to move someone into assisted living or another senior care community, a co-owner of the home must continue to use it as their primary residence. However, it can be an ideal solution for older adults who want to use it to pay for in-home care.

Using reverse mortgages for long-term care

One of the primary benefits of a reverse mortgage is its financial flexibility. Many reverse mortgages will allow you to do whatever you want with the money, whether purchasing groceries, paying for in-home care or nursing home care, or making modifications to your home to make it safe and accessible when aging in place. It can be a crucial resource for seniors facing the rising costs of long-term care. The ability to tap into home equity without selling the property allows for greater comfort and security during retirement years. 

Types of reverse mortgages

There are several types of reverse mortgages, including home equity conversion mortgages (HECMs), proprietary reverse mortgages, and single-purpose reverse mortgages. For individuals looking to fund long-term care while staying in their homes, HECMs are often the most suitable option. They are federally insured and offer the flexibility required for various needs, which can include home modifications for mobility or safety concerns. Proprietary reverse mortgages, offered by private companies, might also be a viable option, especially for homes with higher values.

Some specialized reverse mortgage types may have specific usage restrictions. For instance, single-purpose reverse mortgages, often offered by state and local government agencies or nonprofits, are designed for specific uses like home repairs or property taxes. Borrowers must understand these limitations before choosing a specific type of reverse mortgage.

How a reverse mortgage works

The process of obtaining a reverse mortgage involves several steps. Initially, the lender determines the amount of equity that can be borrowed based on factors like the homeowner’s age, the home’s value, and current interest rates. The homeowner then chooses how to receive these funds, either as a lump sum, regular monthly payments, or a line of credit.

Qualifying for a reverse mortgage

To qualify for a reverse mortgage, applicants must meet certain criteria. The homeowner must be at least 62 years old and have substantial equity in their home. Additionally, the home must be the primary residence where at least one of the homeowners lives and is not a rental property. Among other requirements, lenders also require the homeowner to keep the property in good condition and stay current with property taxes and homeowner’s insurance.

Acquiring a reverse mortgage for long-term care

Choosing the right lender is crucial when considering a reverse mortgage. Selecting a company that specializes in reverse mortgages and has a strong reputation is advisable. The process typically starts with a consultation, followed by a financial assessment to ensure the homeowner can meet the ongoing costs associated with their home.

How you receive the funds from your reverse mortgage for long-term care

Once the reverse mortgage is approved, the homeowner can receive the funds either in a lump sum or through regular payments. Some opt for a line of credit, allowing them to draw on the funds as needed, which can be particularly useful for ongoing long-term care expenses. Some choose a combination of these options. The funds are typically deposited directly into the homeowner’s bank account, providing easy access to the money.

Repayment and obligations

Understanding the repayment terms is essential when considering a reverse mortgage. Unlike traditional loans, a reverse mortgage does not require monthly payments. Instead, the loan becomes due and payable when the borrower sells the home, moves out, or passes away. It’s important to note that the amount owed can never exceed the home’s value. This feature protects both the borrower and their heirs from a potential financial burden.

Additional considerations

Before opting for a reverse mortgage, it’s important to consider its impact on one’s estate and potential effects on eligibility for government benefits like Medicaid. Consulting with a financial adviser or an attorney can help clarify these aspects.

Tax and income implications of your reverse mortgage

Interestingly, the funds received from a reverse mortgage are not considered taxable income because the money is technically a loan and not income. However, it’s always wise to consult with a tax professional for personalized advice.

Interest and loan management

Reverse mortgages typically have variable interest rates, which are added to the loan balance over time. The homeowner doesn’t pay this interest out of pocket; instead, it accumulates until the loan is repaid. Understanding how interest accrues and impacts the total loan amount is important for anyone considering a reverse mortgage.

Repayment terms of your reverse mortgage

Finally, understanding when and how the mortgage needs to be repaid is crucial. The loan is typically due when the last surviving borrower sells the home, permanently moves out, or passes away. At that time, the home can be sold to pay off the reverse mortgage, or the heirs can choose to pay off the loan and keep the home. It’s important to have a clear plan in place for these eventualities.

Reverse mortgages can offer a valuable financial strategy for older adults looking to fund their long-term care needs. By converting home equity into cash, seniors can gain the financial flexibility needed to manage their care expenses while continuing to own their homes. However, it’s essential to understand the intricacies of reverse mortgages, including their repayment terms, tax implications, and potential impact on one’s estate. Consulting with financial and legal professionals is recommended to ensure that a reverse mortgage aligns with one’s overall retirement and estate planning strategy.

It’s important to note that there are quite a few reverse mortgage scams out there, so if you’re looking into a reverse mortgage, make sure you do your research and work with a reputable company.

When a senior sells their home to downsize and move into a senior living community, it marks a significant life transition. However, along with the emotional and logistical aspects of this change, there’s an important financial dimension that often goes overlooked: the tax implications of the home sale. This article aims to clarify the tax responsibilities that arise after selling a home, providing essential insights for seniors and their families. Understanding these tax considerations is crucial, especially when planning for life in a senior care community or assisted living facility.

Is the sale of a house considered income?

A common question among seniors who have sold their homes is whether the sale is considered income by the Internal Revenue Service (IRS). The answer is not straightforward and depends on several factors. Generally, the IRS does not treat the entire amount received from the sale of a home as income. Instead, it considers the profit or capital gain — the difference between the selling price and the original purchase price, adjusted for certain expenses and improvements.

When you might not owe taxes after a home sale

Not all profit from a home sale is taxable. The IRS offers an exclusion on gains from the sale of a primary residence. As of the latest tax guidelines, single homeowners can exclude up to $250,000 of gain, while married couples filing jointly can exclude up to $500,000. To qualify for this exclusion, the homeowner must have owned and used the property as their primary residence for at least two of the five years before the sale.

Due to the generous IRS exclusions, many seniors will not owe taxes upon selling their home. If the profit from the sale falls within the exclusion limits and the property was a primary residence for the requisite period, no federal tax is typically due on the sale. It’s important to note that these rules apply to federal taxes, and state taxes may vary.

Additionally, if the home was sold at a loss — for less than what it was originally purchased for — there is no taxable gain. However, losses on the sale of personal residences are not deductible for tax purposes. This is an important distinction, as it differs from the treatment of investment property losses.

When you might owe taxes after a home sale

Despite these exclusions, there are circumstances under which seniors might still owe taxes after selling their home. If the profit exceeds the aforementioned exclusion limits, the excess amount is taxable. Also, if the property was not used as a primary residence for the required duration, the exclusion might not apply. For example, if the property was a rental or investment property before being converted to a primary residence, different rules may apply.

Another scenario under which taxes could be owed is if the homeowner claimed depreciation on the property for rental use. This depreciation must be recaptured at the time of sale and is subject to tax, meaning your home’s cost basis (the purchase price plus any improvements) will be decreased by the amount you’ve depreciated your home. For example, if you purchased a $250,000 home as an investment property and claimed $25,000 in depreciation on the property before you moved into it, your home’s new cost basis (for the sake of tax purposes) will be $225,000. Seniors who have used their homes for business or rental purposes should be particularly mindful of these tax implications.

Real estate documents you need for tax season

After selling a home, there are several important documents that seniors should retain for tax season. These include the closing statement (also known as the HUD-1 or settlement sheet), which provides a detailed account of the transaction. This document is vital for determining the basis of the home, which is needed to calculate the gain or loss on the sale.

Other important documents include records of home improvements and any expenses related to the sale, such as real estate agent commissions and legal fees. These can potentially reduce the taxable gain by increasing the home’s basis or reducing the selling price. Seniors should hand these documents over to their tax professional, who will use them to ensure an accurate and beneficial tax return.

Real estate tax forms and their purposes

When it comes to filing taxes after selling a home, certain IRS forms become particularly relevant. The most critical of these is Form 1099-S, which the real estate agent or the closing attorney typically issues. This form reports the total proceeds from the home sale and is essential for the IRS to track real estate transactions. However, receiving a Form 1099-S does not automatically mean that there is taxable gain.

Seniors must also complete Schedule D (Form 1040), which is used to report capital gains and losses. On this form, they will detail the sale price, the home’s adjusted basis (original cost plus improvements), and the amount of any exclusion they are claiming. This calculation will determine if there is any taxable gain from the sale. It’s imperative to fill out these forms accurately to ensure compliance with tax laws and to avoid paying unnecessary taxes.

How selling a home helps pay for long-term care

The financial implications of a home sale can significantly affect a senior’s ability to fund long-term care. In some cases, the proceeds from the sale might be earmarked for covering living expenses in a senior care community. However, if a portion of these proceeds needs to be set aside for taxes, this can reduce the funds available for care.

It’s crucial for seniors and their families to factor in potential tax liabilities when planning for long-term care expenses. In scenarios where the sale of the home results in a substantial taxable gain, seniors may need to adjust their budgets accordingly. This might involve allocating funds for tax payments, which could otherwise have been used for care expenses or savings. On the other hand, if the sale falls under the IRS exclusion limits, the full amount of the proceeds can be directed toward their care needs without the concern of a tax burden.

Tax planning becomes integral to managing the proceeds from a home sale, especially when these funds are expected to support long-term care. Consult with tax professionals and financial advisers to create a balanced approach that addresses your tax obligations and care requirements.

Bottom line: A home sale helps pay for care, but know what to do

The sale of a home in the senior years can bring both relief and financial complexity, especially regarding tax implications. Understanding whether the sale of a house is considered income, the circumstances under which taxes are owed, and the essential documentation required for tax season is crucial. Additionally, recognizing the potential impact of these tax responsibilities on funding long-term care is an important aspect of financial planning for seniors.

By being informed and prepared, seniors can confidently navigate these tax responsibilities, ensuring that they maximize their financial resources for a comfortable and secure life in their chosen senior living community. As always, seeking advice from tax professionals and financial advisers is recommended to tailor these general guidelines to individual circumstances.

Tax scams are a prevalent and serious issue, especially for older adults, who are often the primary targets of these deceptive practices. As tax season approaches, it’s important to be well-informed and vigilant to protect yourself and your loved ones from becoming victims. This article aims to shed light on common tax-related scams, how to recognize them, and the steps to take if you suspect you’ve been scammed.

IRS impersonation phone scam

One of the most common tax scams involves fraudsters impersonating IRS officials. These scammers typically contact their targets via phone, often leaving urgent callback requests. They demand immediate payment or personal information, posing as IRS agents and using fake names and bogus IRS identification badge numbers. They may even alter the caller ID to make it look like the IRS is calling.

If you or your loved one live in a senior living community, like an assisted living or a nursing home, you may think you’re safe from these phone scams. Scammers make these calls to landlines but also to cell phones. So, even if you live in a senior living community or don’t have a landline, you need to remain vigilant and beware of calls to a cell phone.

How to spot the IRS impersonation phone scam

Be alert for common signs of this scam. Fraudsters often request payment through prepaid debit cards or gift cards. They may also threaten you with arrest, deportation, or license revocation if you do not immediately comply with their demands. Remember, the IRS will never threaten to bring in local police, immigration officers, or other law enforcement to have you arrested for not paying. They also cannot revoke your driver’s license, business license, or immigration status. Such threats are common tactics scammers use to instill fear and urgency.

Risks of this tax scam and how to avoid it

The risks of falling for this scam include financial loss and identity theft. Never give out personal information over the phone to avoid being a victim. The IRS rarely initiates contact via phone call. If you are unsure whether a call is legitimate, hang up immediately and contact the IRS directly.

Email phishing scams

Another method fraudsters use is phishing scams: sending emails that appear to be from the IRS, intending to steal personal information. These emails often include a link to a bogus website intended to mirror the official IRS website.

How to spot the email phishing scam

These emails usually contain unsolicited requests for personal or financial information. Look for signs of the scam, like poor grammar, fake IRS logos, strange-looking email addresses, and links or attachments. The IRS does not initiate contact with taxpayers by electronic communication, including emails, text messages, and social media channels, to request personal or financial information. 

Risks of this tax scam and how to avoid it

The primary risks here are identity theft and financial fraud. Do not click on links or download attachments from unknown or unsolicited emails. Always verify the email’s authenticity and report any suspicious IRS-related phishing attempts.

Fake charities

Scammers also set up fake charities, often during times of disaster or crisis, to steal money or get personal information from taxpayers. They may even claim that donations are tax-deductible, but since the money is not actually going to a charitable organization, they are not.

How to spot the fake charities scam

Be wary of charities with names similar to nationally known organizations or that you have never heard of. They may reach out via email, phone calls, or fake websites and request gift card payments or wire transfers. Fraudulent charities usually use high-pressure tactics and are unwilling to provide details about their identity, mission, costs, and how the donation will be used.

Risks of this tax scam and how to avoid it

Besides financial loss, donating to fake charities can lead to the theft of personal information. To avoid falling victim to this scam, check if the charity is legitimate using the IRS’s Tax Exempt Organization Search tool. Legitimate charities will be listed there. Resist requests for urgent donations or strange payment methods.

Tax preparer fraud

Tax preparer fraud is a critical concern. In this scam, dishonest preparers use their clients’ information for refund fraud or identity theft. These preparers might promise inflated refunds, use unorthodox methods to calculate taxes, or charge fees based on a percentage of the refund.

How to spot the tax preparer scam

Be cautious of tax preparers who promise unusually high refunds or charge fees based on the size of the refund. Another red flag is if they ask you to sign a blank or incomplete tax return. A reputable tax preparer will always be transparent about their services and fees and will review the return with you before filing.

Risks of this tax scam and how to avoid it

The risks include identity theft, financial loss, and potential legal complications. To avoid falling victim to this scam, choose a tax preparer with proper IRS qualifications and a good reputation. Check their history with the Better Business Bureau and ensure they have a preparer tax identification number (PTIN).

Ghost tax preparer scam

Another scam to be aware of is the ghost tax preparer scam. Ghost preparers do not sign their tax returns, which violates IRS regulations. These individuals often promise big refunds and charge high fees, but they don’t attach their names to the tax return, leaving you responsible for any errors. They may also steal the individual’s tax refund by depositing it in their own bank account.

How to spot the ghost tax preparer scam

A telltale sign of a ghost preparer is their refusal to sign the tax return or provide a PTIN. They may also insist on cash payments without providing a receipt or include incorrect information on tax returns. Ensure that any tax preparer you use signs the return and includes their PTIN as required by law.

Risks of this tax scam and how to avoid it

The risks associated with ghost preparers include stolen refunds, incorrect tax returns, and potential legal issues. To avoid these risks, never agree to work with a tax preparer who refuses to sign your return. The IRS has a directory of credentialed tax preparers to help you find a trustworthy tax professional in your area. Always ensure your tax return is accurate and fully completed before signing it yourself.

Beware of tax scams

Tax scams pose a significant threat, especially to older adults, who are common targets of these schemes. Recognizing the signs of these scams is crucial in protecting yourself and your finances. Always exercise caution with unsolicited communications, verify the legitimacy of tax preparers and organizations, and be wary of promises of inflated refunds.

If you suspect you have been a tax scam victim, it’s important to act quickly. Contact the IRS and report the incident. You may also need to take additional steps, such as contacting your bank, changing passwords, or seeking legal advice.

Remember, the best defense against tax scams is knowledge and vigilance. Stay informed about the latest scam tactics, and don’t hesitate to seek advice from trusted professionals or the IRS if you encounter any suspicious activity. With the right precautions and awareness, you can protect yourself from becoming a victim of these deceptive practices during tax season and beyond.

The majority of older adults want to live in their homes as long as possible while remaining safe and independent. More than 70% of adults want to do this, also called aging in place. While aging in place used to rely on seniors having a network of family caregivers nearby, today’s adults don’t need to call on family and friends to provide support. Home care agencies bring support and assistance into the home through personal care and homemaker services, making aging in place a realistic goal. Here, we’ll explain the differences in what you can expect from personal care and homemaker services so you can make the right choice for your home care needs.

What is in-home care?

In-home care is assistance brought into the home that supports older adults who want to age in place. There are two types of home care agencies: medical (home health) and nonmedical (home care). 

Medical home health provides medical services administered by licensed clinicians, such as nurses or therapists. Common medical home health services include wound management, complex pain management, and physical, occupational, or speech therapy.

Nonmedical home care services are administered by caregivers rather than licensed clinicians. This nonmedical care includes transportation, companionship services, personal care, and homemaker services.

Personal care vs. homemaker services

Nonmedical home care is the best option for many seniors and their family members for their aging-in-place goals. Nonmedical services fill in the gaps that might exist due to decreased mobility, cognitive skills, or energy.

Two of the most common types of nonmedical home care services are personal care and homemaker services. While these two are similar in that they are both nonmedical and administered by caregivers, some key differences can help you determine which option might be best for your situation.

Be sure to clarify with the agency you are researching what type of tasks and assistance are included in the personal care and homemaker services they offer, as some agencies have varying definitions. However, here are a few general guidelines to help you decide which is best for you.

Personal care services

Most nonmedical home care agencies offer personal care services, which assist and support older adults with activities of daily living. These activities of daily living can include:

• •Dressing.
• •Grooming.
• •Bathing and/or showering.
• •Ambulation, or moving from one place to another in the home.
• •Eating, as in the actual process of eating, as opposed to grocery shopping or meal preparation.
• •Toileting or incontinence management.

Caregivers are trained to provide personalized support with personal care tasks based on the older adult’s needs and preferences. For someone more independent, this might mean verbally reminding the senior that it is time to get dressed for the day or that Tuesdays and Thursdays are shower days. For someone who requires more help, the caregiver might provide setup assistance, such as pulling out grooming supplies and putting toothpaste on the toothbrush, standing by to provide verbal cues as needed. For a senior who needs even more support, the caregiver might physically assist by helping them brush their teeth, shower, or get dressed.

Personal care task assistance is highly personalized. Caregivers follow a care plan, which details what type of support the senior needs with each activity of daily living. The care plan can change as the needs of the senior change. In most nonmedical home care agencies, the care plan is developed by a clinician or an experienced senior care advocate who assesses the needs of the senior and works with them to set care goals.

Who provides personal care assistance?

A caregiver provides personal care assistance in the senior’s home. This caregiver is not necessarily a certified nursing assistant (CNA), but depending on your state’s home care guidelines, they have been through some type of caregiver training.

How much does personal care assistance cost?

Nonmedical home care services, including personal care, typically cost an average of $26 per hour. Costs vary not only by state or region but also by home care agency. You might be able to find a discount if you book a certain number of hours per week or month with an agency, for example.

Who is an ideal candidate for personal care assistance?

Seniors who struggle with independently performing activities of daily living are ideal for personal care assistance. They might have limited mobility, pain, or decreased endurance, all of which can make regular activities of daily living difficult. Someone living with cognitive decline can also benefit from this type of assistance. 

Homemaker services

Not all nonmedical home care services center on assisting with activities of daily living. Homemaker services help seniors care for their homes and organize their lives so that they meet personal wellness goals. Homemaker services can include:

• •Meal planning.
• •Shopping for groceries.
• •Meal preparation, including storing meals for future consumption.
• •Light housekeeping.
• •Laundry services.
• •Transportation to or from appointments or errands, including escorting the senior during these trips as needed.
• •Transportation to or from social gatherings.
• •Scheduling appointments and/or transportation services.

Who provides personal care assistance?

Caregivers perform homemaker services. These caregivers are not necessarily CNAs but have completed the caregiver training their state requires. A representative from the home care agency supervises the caregivers.

How much do homemaker services cost?

Nonmedical homemaker services typically cost similar rates to personal care. However, you might find that a nonmedical home care agency near you charges a bit less for homemaker services; it varies by agency. There are various ways to pay for homemaker services costs, including private funds, long-term care insurance (if you meet the requirement to utilize your policy), Medicaid waivers (for qualifying individuals), or Veterans benefits.

Who is an ideal candidate for homemaker services?

Seniors who can no longer drive and who do not have family support or community transportation assistance nearby can benefit from homemaker services. Others who might benefit include adults in the early stages of dementia who struggle with household chores or seniors who have never had to cook for just one person. 

The right homemaker services can boost energy levels for the senior, as they no longer have to carry the mental and physical weight of certain household management tasks. Instead, they can use that time and energy on their personal care tasks, social calendar, and favorite activities or pastimes.

If you aren’t sure which home care option might be best for your loved one, begin by contacting a few nonmedical home care agencies in your area. Most offer free or reduced-rate consultations, and you can give more details about your situation so they can make a professional recommendation.

Seniors may need to make modifications to their homes so they can comfortably and safely age in place. However necessary the changes are, home modifications to accommodate older adults with disabilities can be very expensive. Fortunately, modifications that the IRS classifies as medical costs might qualify as tax-deductible expenses and therefore save you money. Here’s what you need to know about these types of tax-deductible expenses to learn if you can save money next tax season.

What is a tax deduction?

A tax deduction is a tax incentive that subtracts an item or expense from a taxpayer’s total adjusted gross income. Taking advantage of tax deductions can lower your overall tax obligation by reducing your taxable income. 

Each taxpayer must choose between taking the standard deduction, which is a set dollar amount that reduces their overall adjusted gross income, and itemizing their deductions. An advantage of itemizing is that it allows taxpayers greater savings if their tax-deductible itemizations are higher than the standard deduction. 

How can itemizing expenses save seniors money?

Itemized deductions benefit taxpayers who don’t qualify for the standard deduction and can save seniors money depending on their tax bracket by reducing the amount of money they owe on their tax bill. Many medical and dental expenses are tax deductible, as are various insurance premiums and long-term care costs. Seniors with significant out-of-pocket expenses in these areas could save money by itemizing their deductions.

Note that there are limits to how much a taxpayer can itemize. For example, taxpayers can itemize and deduct medical and dental expenses exceeding 7.5% of their annual adjusted gross income. State tax law varies, so it is best to speak to a tax professional in your area to learn more about tax deduction limits.

What are capital expenses?

People often hear the term “capital expenses” as business expenses. This phrase is used when a business incurs expenses to either create or enhance business assets and help reduce the cost of improvements throughout the year. Office equipment could be considered capital expenses for a business. But capital expenses don’t apply just to businesses. Seniors may be able to take advantage of a capital expense tax deduction as well.

The IRS also allows capital expenses to apply to individuals in certain circumstances, including for some home modifications. An individual can deduct reasonable costs as capital expenses when they make improvements to or install equipment in their home that is necessary for medical care. The costs of these modifications are considered medical expenses and may be tax deductible. We’ll explain what is reasonable and which costs may be considered capital expenses next.

Home modifications that can be capital expenses

For seniors who need to make medically necessary home modifications to make living at home more accessible, only reasonable costs to accommodate a disability may be deducted from your taxes. These types of home modifications are considered medical costs.

The IRS has guidance on what medical costs can be deducted as a capital expense. Most medical care costs relate to accessibility and will make moving about the home easier for an older adult. Examples of improvements that qualify include:

• •Widening doorways and hallways.
• •Placing ramps near the entrances and exits of your home.
• •Installing railings and support bars.
• •Installing porch lifts.
• •Lowering electrical outlets and fixtures.
• •Changing the hardware on doors.
• •Modifying stairways.

Capital expense deductions must comply with rules determining how much of the expense is tax deductible. The IRS states that “the cost of permanent improvements that increase the value of your property may be partly included as a medical expense. … If the value of your property isn’t increased by the improvement, the entire cost is included as a medical expense.” You must keep track of these records carefully to adhere to tax laws. Most taxpayers need a professional’s help properly completing their income tax returns to comply with every applicable state and federal law.

How to claim medical expense tax deductions

If you choose to claim medical expense itemizations for the tax year, you will need proof of the expense. Make sure that you keep receipts and other documentation that you paid a medical expense for yourself, your spouse, or a qualified dependent.

You will also need to complete the proper paperwork to ensure that the IRS receives all the information it requires from you as a taxpayer. Taxpayers who want to claim medical expenses should complete IRS Form 1040. IRS Publication 502 explains every type of medical expense that the IRS accepts and describes whose expenses you can claim. It’s always best to consult with a tax professional to be sure that you are filing correctly.

Speak with a trained tax professional

Now that you have the information listed above, you can make better decisions regarding your plan for preparing your taxes for the upcoming season. Knowing what to ask a tax professional will maximize your time and save some money. 

For some older adults, managing a home, completing chores, and keeping everything tidy can simply be too much. If your loved one needs additional help at home, you don’t have to find time in your busy schedule to do all their chores. Today’s older adults have lots of options when it comes to finding support so that they can age in place in the home they love for longer. Homemaker services provided through a nonmedical home care agency might be the ideal solution. Here, we go over the details of homemaker services so you can know if it is the right fit for you or a loved one.

What is home care?

There are two types of home care agencies: nonmedical and medical. Medical home care agencies are more commonly referred to as home health agencies and provide medical care in the home through licensed clinicians like nurses, therapists, and certified nursing assistants. Nonmedical home care agencies give nonmedical support in the home provided by unlicensed professional caregivers. Nonmedical agencies provide homemaker services as one of their options to families looking to get assistance in their older loved one’s home.

What are homemaker services?

Homemaker services are loosely defined as tasks that help seniors maintain their household but are not necessarily personal care tasks. Homemaker services can vary from agency to agency, depending on their definition. However, in general, homemaker services include:

• •Meal planning.
• •Grocery shopping.
• •Meal preparation, including storing leftovers.
• •Transportation to/from appointments and escorting the senior throughout the process.
• •Transportation to/from social events, family gatherings, etc.
• •Light housekeeping.
• •Laundry and linen services, including stripping and washing linens weekly or as otherwise arranged.
• •Running errands with or on behalf of the older adult.

Some nonmedical home care agencies also consider companionship a part of homemaker services, which can include visiting with the older adult, coming with prepared activities to do together, and planning upcoming excursions into the community.

In a few rare instances, assistance with personal care, such as support with bathing, dressing, grooming, and other activities of daily living, is also included in homemaker services. Generally, though, this type of support does not fall under the homemaker services category.

In all cases, homemaker services are provided by caregivers. Depending on the state, these caregivers might have been trained in certain tasks by their agency before arriving at the senior’s home. Most nonmedical home care agencies have a comprehensive training program for their caregivers and oversight by a manager, who can sometimes be a nurse or clinician.

What tasks are not homemaker services?

Homemaker services are never medical, so you will not find any of the following tasks associated with homemaker services:

• •Medication management.
• •Chronic disease management.
• •IV therapy.
• •Wound checks or wound care.
• •Physical, occupational, or speech therapy.
• •Professional case management.

Are homemaker services best for my loved one?

Homemaker services are ideal for someone who feels overwhelmed by household chores or who simply doesn’t have the energy or capability to do them. If your loved one meets any of the following considerations, homemaker services might enhance their quality of life:

• •No longer drives.
• •Has lost weight in recent months.
• •Eats convenience or processed foods for most meals during the week.
• •Has never learned how to cook for one person.
• •Feels lonely at times.
• •Wears the same clothes repeatedly to avoid adding to the laundry pile.
• •Waits for family members to assist with chores around the house.
• •Struggles to implement suggestions from doctors and family members.
• •Declines to attend gatherings because they don’t want to find a way to get there.

How much do homemaker services cost?

Homemaker services are billed through the home care agency, and costs can vary from state to state and agency to agency. However, it is safe to assume homemaker services will be billed out for anywhere from $10 to $30 per hour, depending on the agency and location.

Finding homemaker services near my loved one

If you think homemaker services would be a good fit for your senior loved one, search for a nonmedical home care agency in their area. You’ll want to set up a consultation with a few agencies (most offer free or reduced-rate consultations for new customers) to ask them questions and tell them more about your loved one and their needs.

When speaking with potential agencies, be sure you understand their definition of homemaker services. If your loved one needs support with personal care, it’s possible they might not provide those services or might increase the hourly rate if they do. It’s best to be on the same page before enlisting their services.