Schedule A medical expenses and the 7.5% AGI floor

The federal rule for 2026 is unchanged from 2025: medical expenses deduct on Schedule A only above 7.5% of AGI. If your household AGI is $120,000, the first $9,000 of medical spending doesn’t deduct. Everything above that line does, if it meets the IRS definition in IRS Publication 502.

According to 24 Hour Home Care NJ, roughly half of our private-pay families in Union and Essex counties running 24-hour care at $720 to $1,080 per day end up well past the 7.5% floor within three to four months. A live-in schedule at $400 to $550 per day gets there slower, but still crosses the threshold for most middle-income retirees before the calendar year closes. Two numbers you’ll want from us before April: total paid in the tax year, and the share of hours tied to activities of daily living (bathing, transfers, toileting, medication reminders) versus companion time. Reach the care line at 24hourhomecarenj.com or call (908) 912-6342 for the annual statement.

What qualifies: CHHA services tied to a diagnosed condition

IRS Publication 502 treats care from a Certified Home Health Aide (CHHA) as a qualifying medical expense when the services address a diagnosed condition. Dementia, post-stroke recovery, Parkinson’s, congestive heart failure, advanced arthritis, post-surgical recovery, and end-stage kidney or lung disease commonly qualify. CHHA work on bathing, transfers, incontinence care, feeding, and medication reminders is medical, not personal.

A short letter from the primary care physician or hospital discharge planner, dated the same month care begins, makes the deduction cleaner. One sentence naming the condition and stating that ADL assistance is medically necessary is usually enough. Overlook Medical Center and Morristown Medical Center discharge planners often draft this on request. If you need a template to hand your physician, we’ll email one. Explore the full 24-Hour Home Care in New Jersey · Private-Pay Receipts and Statements overview for how we tie each monthly bill back to the care plan.

According to 24 Hour Home Care NJ, the CHHA license number on each invoice is what Schedule A reviewers look for first. Every aide we schedule in Union County, Essex County, and Morris County is a current NJ-licensed CHHA, and that license number appears on the itemized statement.

What doesn’t: companion-only hours without a medical component

Pure companion visits (someone to sit, chat, drive to the grocery store, play cards) without any hands-on care are not deductible under Schedule A, even if the person being helped is elderly. IRS rules draw the line at whether the service addresses a medical condition. A healthy 82-year-old who just wants company doesn’t trigger the medical expense rule.

This matters for the breakdown on our monthly statement. If a family mixes four hours of companion time with six hours of CHHA care per day, we itemize both separately. The six CHHA hours deduct. Those four companion hours don’t. We won’t blur the line because the IRS auditors who follow up on large medical deductions catch that pattern quickly.

There’s an exception worth knowing: if a physician writes an order stating that supervision for a dementia patient requires continuous presence to prevent wandering or self-harm, those supervision hours can qualify as medical even without hands-on care. Call (908) 912-6342 if your parent has a dementia diagnosis and you need help structuring the care plan to match.

Claiming an aging parent as a dependent in 2026

If you’re paying for a parent’s home care in NJ, you might also be able to claim the parent as a dependent on your own return, which lets you deduct their medical expenses on your Schedule A. The 2026 tests: you provided more than half of the parent’s total support, their gross income was below $5,200 (2026 figure, excluding Social Security), and they’re your biological or adopted parent or a qualifying relative.

Social Security doesn’t count toward the gross income cap, but pensions and retirement account withdrawals do. We’ve seen families in Somerset and Middlesex counties clear the support test easily (24-hour care at $720 to $1,080 per day usually exceeds a parent’s own income) and then run into the gross income rule because of a pension. Multiple-support agreements (IRS Form 2120) let siblings who share the cost rotate who claims the dependent year to year. If three adult children in Bergen County each pay a third of mom’s care, only one can claim her, but the three can sign Form 2120 to rotate the deduction. Your CPA sets that up.

New Jersey state medical expense threshold on NJ-1040

New Jersey’s medical expense deduction on NJ-1040 Schedule A Line 2 uses a 2% of gross income floor instead of the federal 7.5%, so NJ residents often see a state-level benefit even when the federal floor isn’t crossed. Qualifying expenses mirror the federal rules (CHHA care for diagnosed conditions counts), but the lower floor opens the deduction to households that run smaller care budgets.

According to 24 Hour Home Care NJ, this is the piece families most often miss. A household with $80,000 of NJ gross income has a $1,600 state-level floor, and one quarter of CHHA care clears that easily. If you’ve been filing NJ-1040 without claiming the medical deduction, your CPA can amend the prior three years using the itemized statements we provide. The NJ Division of Taxation sometimes requests the CHHA license number, service dates, and hourly rate for larger medical deductions. We keep seven years of records on file and reissue statements in two business days.

FSA and HSA rules for home care in 2026

Flexible Spending Account (FSA) and Health Savings Account (HSA) funds can pay for CHHA care under the same medical expense definition the IRS uses for Schedule A. For 2026, the FSA contribution limit is $3,300 and the HSA family contribution limit is $8,550. If you have an HSA with a high-deductible health plan at work and a parent qualifies as your dependent, you can run their CHHA bill through the HSA tax-free. Two mechanics to know: you can’t double-dip (hours paid with HSA dollars can’t also be deducted on Schedule A), and FSA plans usually require a Letter of Medical Necessity from a physician before they’ll reimburse home care. We can send invoices directly to the plan administrator at 24hourhomecarenj.com or email you the PDF to submit.

Documentation 24HCNJ provides at tax time

Every family on our schedule gets a monthly itemized statement by the 5th of the following month. The statement lists each shift date, start and end time, caregiver name, CHHA license number, hourly rate, and the care-plan category (ADL assistance, medication reminders, companion time, overnight). At year-end, we assemble these into an annual summary PDF with totals broken out by category and a cover memo noting the care plan diagnosis.

For employer-of-record situations (where a family hires the caregiver directly through our household employer service), we issue the Form W-2 or 1099 required by the IRS by January 31. Payroll taxes we remit on the family’s behalf during the year appear on the annual summary so your CPA can match them against your Schedule H filing. Private pay and private insurance only. We don’t accept Medicaid or Medicare. If your CPA wants anything else, a signed letter from Sofia Elmer, RN confirming the care plan, copies of individual shift notes, or a reissued statement in a different format, we’ll get it over within three business days. The AARP’s caregiver financial resource center is a good second read if you want a plain-English refresher before filing.

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