Key Points:
- Adult daycare may be tax-deductible under specific conditions, particularly if it’s medically necessary or part of dependent care.
- IRS rules allow some caregivers to claim adult daycare costs under the Dependent Care Credit.
- Documentation, qualifications, and tax filing strategies can maximize your chances of deducting adult daycare expenses.
You’ve found the perfect adult daycare program for your parent, but as the monthly bills add up, you wonder: Can I get some financial relief? If you’re searching for ways to offset the cost, you’re not alone—and yes, adult daycare can be tax-deductible, depending on your situation.
Let’s break it down in simple terms and explore how to understand your options when it comes to deducting adult daycare expenses.
What Does the IRS Say About Adult Daycare Tax Deductions?
The IRS doesn’t have a section labeled “adult daycare,” but certain rules allow caregivers or seniors themselves to claim related costs as a tax deduction or credit.
The most common tax benefits for adult daycare fall under two categories:
- Medical expense deductions
- Dependent Care Credit (Child and Dependent Care Tax Credit)
Each option has specific qualifications, so let’s walk through both in more detail.
Claiming Adult Daycare as a Medical Expense Deduction
If adult daycare is provided primarily for medical reasons, you may be able to include those costs as part of itemized medical deductions.
Qualifying Conditions
To claim adult daycare under medical expenses:
- The care must be prescribed or recommended by a licensed healthcare provider.
- The individual must be diagnosed with a chronic illness, such as dementia, Alzheimer’s, or mobility-related conditions.
- The services received should be focused on health maintenance—like physical therapy, supervised care, or medication management.
Only the medical portion of the care is deductible—not meals or general social activities.
Who Can Claim It?
If you’re a caregiver and the person receiving care is a qualifying relative or dependent, you may be able to include the cost in your itemized deductions. The IRS defines a qualifying relative as someone who either lives with you or meets certain income and support requirements.
To claim medical deductions:
- You must itemize deductions on your return using Schedule A.
- Your total unreimbursed medical expenses (including adult daycare) must exceed 7.5% of your adjusted gross income (AGI).
This makes it especially helpful for families with significant medical expenses.
Using the Dependent Care Credit for Adult Daycare
One of the most accessible tax benefits for adult daycare is the Child and Dependent Care Credit—and yes, this applies to adults, too.
What Is It?
The Dependent Care Credit allows you to claim a percentage of costs related to the care of a dependent adult while you work or look for work.
In the context of adult daycare, this means you can get credit for daytime care services that allow you (the caregiver) to maintain employment.
Who Is Eligible?
To qualify, these IRS conditions must be met:
- The person receiving care is your spouse or dependent who is physically or mentally unable to care for themselves.
- The person lived with you for more than half the year.
- You (and your spouse, if filing jointly) earned income during the year.
- The adult daycare provider is not your spouse, child under 19, or anyone you can claim as a dependent.
How Much Can You Claim?
You may be able to claim up to 35% of qualifying expenses, depending on your income. The maximum allowable expenses for one qualifying individual are up to $3,000 per year. To claim this credit, file IRS Form 2441 along with your tax return.
What Counts as Qualifying Adult Daycare?
When thinking about deductions or credits, not all daycare programs will qualify. The type of care matters.
To increase your chances of deductibility:
- Choose programs that include health-related services, cognitive therapy, or supervised care.
- Keep detailed invoices and receipts showing what services were provided.
- Ensure the center can provide its tax ID or EIN number, which is needed for filing certain tax forms.
Tips to Make Adult Daycare Expenses Tax-Deductible
Many families miss out on tax savings because they don’t keep the right records or fail to understand what qualifies. Here are some practical tips:
1. Keep Organized Records
Maintain a folder with:
- Receipts from the adult daycare center
- Letters or recommendations from doctors
- Mileage logs if you transport your loved one
- Documentation of your loved one’s diagnosis or condition
This makes filing easier and protects you in case of an audit.
2. Talk to a Tax Professional
Tax rules around medical deductions and dependent care can be complex. Consulting a CPA or tax advisor familiar with elder care can ensure you’re not leaving money on the table.
They can help you:
- Determine if your dependent qualifies
- Distinguish between deductible and non-deductible services
- Maximize savings based on your income and filing status
3. Explore State Tax Breaks
Some states offer their own tax credits or deductions for elder care expenses. These vary widely by location, so it’s worth looking into your state’s Department of Revenue site or asking your tax preparer about local options.
Can the Senior Themselves Deduct Adult Daycare?
If the person receiving care is filing their own taxes and itemizing deductions, they may be able to deduct adult daycare expenses if the services are medically necessary.
They must:
- Have sufficient medical expenses to exceed 7.5% of their AGI
- Be receiving services that are primarily for medical care, not just companionship
Keep in mind that most seniors benefit more from standard deductions unless their medical costs are high.
What Adult Daycare Expenses Aren’t Deductible?
To avoid trouble at tax time, here are some costs that usually don’t qualify:
- Meals and snacks (unless medically necessary)
- Transportation (unless billed separately and related to medical appointments)
- Entertainment or purely social activities
- Costs paid by insurance or reimbursed by another program
Always check the specifics with a tax advisor to stay compliant.
Save Receipts, Ask Questions, and Take Advantage of What You Can
Tax deductions and credits can help relieve some of the financial pressure that comes with adult caregiving. While not all adult daycare costs are deductible, many families are surprised to learn that they qualify for at least partial tax relief.
By staying informed and organized—and knowing the right forms and rules—you can stretch your budget further while still providing excellent care for your loved one.
Take Action: Find Affordable Adult Day Care in New York
If you’re looking to ease the cost of caregiving while ensuring your loved one gets quality support during the day, Centers Adult Day Care offers welcoming and dependable adult day care in New York.
Our programs provide a balance of health supervision, engaging activities, and social connection—potentially qualifying for tax savings under the IRS rules we’ve explored. Whether you’re working, caregiving, or both, let us help you create a sustainable care solution.
Contact us today to learn how our adult day care services can work for your family—and your finances.