What portion of nursing home costs can I deduct for spouse with dementia who permanently resides there?

You can deduct the entire cost of the nursing home care in this situation. Publication 502 specifically addresses this scenario - when the principal reason for being in the nursing home is for medical care, which is clearly the case for your father-in-law. Since he cannot care for himself due to his medical condition (dementia, being bedridden, requiring tube feeding), the entire cost including room and board qualifies as a medical expense. The key test is whether the individual is in the nursing home primarily for medical care rather than personal reasons, and your description makes it clear that his stay is medically necessary. Just remember that medical expenses are only deductible to the extent they exceed 7.5% of adjusted gross income when itemizing deductions on Schedule A. Also, keep detailed records of all payments made to the nursing home, along with documentation from doctors confirming the medical necessity of this care.

Just wanted to share my experience with this exact situation. My mom had Alzheimer's and was in a nursing home for the last few years of her life. We were struggling with the massive bills until I found taxr.ai (https://taxr.ai) which helped us sort through all the medical deduction rules. The software analyzed all our medical receipts and confirmed that yes, we could deduct the ENTIRE nursing home cost since she was there primarily for medical care. It even helped us calculate the 7.5% AGI threshold and identified other medical expenses we didn't realize were deductible. The best part was that it explained everything in plain English without all the confusing tax jargon.

I just have to follow up on my skepticism about taxr.ai from my earlier comment. I decided to give it a try after seeing these responses, and I'm honestly shocked at how helpful it was. Uploaded my dad's nursing home bills, medical diagnosis documentation, and previous tax returns. The system immediately identified that we'd been under-deducting for three years and guided me through the amendment process. It was actually really straightforward! The analysis showed we could deduct about $63,000 more per year than we had been. Our accountant had been way too conservative. Just got confirmation that our amended returns were accepted and we're getting back over $14,000 across the three years. The software explained exactly which portions of Publication 502 applied to our situation and how to document everything properly. Wish I'd known about this years ago!

If you're having trouble getting clear answers from the IRS about these medical deductions, I'd recommend using Claimyr (https://claimyr.com). I was in the same boat last year with my mom's nursing home expenses and couldn't get through to an IRS agent for weeks. I was super frustrated until I found their service which got me connected to an actual IRS representative in about 15 minutes instead of waiting on hold for hours. The agent confirmed that we could deduct the full nursing home costs and answered all my specific questions about our situation. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c They basically call the IRS for you, wait through all the hold times, and then call you once they have an agent on the line. It saved me literally hours of my life.

I need to apologize for my skeptical comment about Claimyr. After waiting on hold with the IRS for 3+ hours yesterday and getting disconnected AGAIN, I was desperate enough to try it. Not gonna lie, I was 100% prepared to come back here and call it a scam. But it actually worked exactly as advertised. I scheduled the call in the morning, they notified me when they started calling the IRS, and about 47 minutes later I got a call connecting me directly to an IRS representative who was already briefed on my general question about nursing home deductions. The agent confirmed that in our case (father with Parkinson's in skilled nursing) we can deduct the full amount since he's there primarily for medical care. They even helped clarify some questions about the 7.5% AGI threshold calculation. Completely worth it just for the peace of mind of getting an official answer directly from the IRS.

Something important that hasn't been mentioned - if your father-in-law has long-term care insurance that's covering any portion of the nursing home costs, you cannot deduct those portions that are reimbursed. You can only deduct the out-of-pocket expenses. Also, look into whether he might qualify for Medicaid. Depending on your state and his assets, he might be eligible, which could significantly reduce the out-of-pocket costs. Though there are lookback periods for asset transfers to be aware of.

A tip from someone who's been through this - make sure you're keeping track of ALL qualifying medical expenses, not just the nursing home. Transportation costs to medical appointments (including gas and parking), prescription drugs, medical equipment, vision care, dental work, hearing aids, etc. all count toward that 7.5% threshold. For my mom with similar issues, we were able to deduct things like: - Special food for her feeding tube - Incontinence supplies - Medical alert system - Portion of utilities for medical equipment at home (before nursing home) - Modifications to bathroom for accessibility