Can the Cost of Adult Day Care be Deducted on Income Taxes?

Can the Cost of Adult Day Care be Deducted on Income Taxes?
Adult daycare expenses qualify for a dependent care credit.

Child and Dependent Care Credit

If you pay daycare expenses for an adult dependent or a spouse who is physically or mentally unable to care for himself, you can claim a dependent care credit on your taxes. You can claim up to 35 percent of adult daycare costs for one dependent, as long as expenses are no more than $3,000. If you paid more than $3,000, you qualify for a credit of up to 35 percent of $3,000. The actual credit percentage depends on your adjusted gross income.

Qualifications

To qualify you for the credit, the dependent must have resided with you at least half of the tax year. You can also claim the credit if you pay daycare expenses for an individual who lives with you but earns too much money to qualify as a dependent, files a joint return or qualifies as the dependent of another taxpayer. The credit only applies if you need daycare so that you can work.

Medical Deduction Option

If you have a spouse or an adult dependent who is disabled, you can count daycare expense as either a dependent care credit or a medical expense deduction. The choice is yours; you just can't use the same expense for both the credit and the deduction, according to the IRS. If you qualify for either, compare the options to determine which is more beneficial. If you pay $3,000 for care and qualify for a 20 percent tax credit, you reduce your tax burden by $600. On the other hand, you can only deduct medical expenses in excess of 7.5 percent of your adjusted gross income. If you earned $50,000 during the tax year, you don't get to claim the first $3,750 in medical expenses, so you wouldn't get a deduction, in this example.

Considerations

The dependent care credit doesn't apply if you pay your spouse or your child who is under 19 to provide care for an adult dependent. You're required to identify the care provider using a valid taxpayer identification number when you file your taxes.

To qualify for the maximum 35 percent deduction, your adjusted gross income must be $15,000 or less. The percentage decreases as adjusted gross income increases, bottoming out at 20 percent for an adjusted gross income of more than $43,000. You must file a joint return if you're married in order to qualify for the credit.