Manage my business

Tax deductions for home health care workers

If you work in home health care, you probably either work for an agency or as a self-employed professional. You might even do both.

If you have an employer, you generally don’t have to worry about figuring out tax deductions. Your employer explains which expenses are your responsibility and reimburse you for eligible items. That said, if your unreimbursed expenses exceed 2 percent of your adjusted gross income, there are some expenses you can claim on your taxes.

Similarly, if you are self-employed, there are applicable tax deductions for home health care workers that can save you a lot of money. Here are a critical few not to overlook.

Vehicle expenses

The chances are that you use your vehicle in important ways in home health care. For instance, you may use your car to visit with multiple clients a day or take them to doctors’ appointments. That means paying for gas, insurance, repairs and much more.

You can deduct these expenses, some in full, some partially, on your taxes, but it’s important to keep meticulous records. If an audit occurs, the IRS will want to see a detailed mileage log of your trips, complete with dates, mileage and why the drives were necessary.

Home office deduction

If you perform critical functions in an area dedicated to your business, you’re probably able to use a home office deduction. However, your use of the space must be exclusive to your work. For example, if your home office has a futon where your nephew sleeps on his weekly overnight stays, that could be problematic. The same idea applies if you use the computer in your office for personal use in addition to business use, for example, on weekends when you don’t work.

Internet and phone use

Whether you take a home office deduction or not, you can claim deductions based on your work internet, phone and fax use. Partial deductions are allowable, so there’s no need to set up separate internet or phone accounts if you don’t want to. Spend 40 percent of your time online for business purposes, deduct 40 percent of your internet bill.

Lease payments, loans and purchases

If you rent or lease office space, you can deduct these payments on your taxes. You can also deduct lease payments made for furniture and equipment. For a car lease, choose either mileage or lease payments to deduct.

You can also apply purchases for furniture and other items that are used in your business to help with your tax burden, although they may not be considered deductions per se. For example, a couch in your office may be regarded as an asset that can still save you money on your taxes, while you could deduct subscriptions for magazines that clients read while waiting to meet with you.

If you have an item such as a laptop that you use for both personal and business purposes, you can take partial deductions. Say that 70 percent of your laptop’s use is for business purposes. You can deduct 70 percent of its cost. The same idea applies if you use software programs such as Microsoft Excel for both business and personal reasons.

Professional association dues

Healthcare is a field that brings change every day, and one method professionals stay current in the discipline is by joining professional associations. You can deduct the cost of your dues.

Work-related travel and education

If you attend seminars, conferences or workshops, you can deduct many of the expenses, either wholly or partially, associated with that travel. Be sure to keep detailed records, especially if you combine any business trips with personal interests.

You can also deduct educational expenses such as tuition, supplies and books as long as the education you’re seeking qualifies under IRS guidelines. The study must be in-line with improving or maintaining your job skills.

You can also deduct costs for medical journals, books and many travel expenses. With books, though, you can deduct them only if their useful life is less than a year. Otherwise, they’re considered capital assets (like the couch from the earlier example) and are subject to depreciation. Either way, you’re able to minimize the expenses of book purchases on your taxes.

For home health care workers who work for an agency/company

Maybe you’re not self-employed, but you work for an agency or company. There are some tax deductions for home health care workers you may qualify for as long as the expenses are more than 2 percent of your adjusted gross income and your employer doesn’t reimburse you for them.

They include expenses for:

  • Education
  • Work-related travel
  • Professional association dues
  • Uniforms that you can’t adapt to wear elsewhere
  • Shoes
  • Protective items such as masks and gloves

Similarly, you don’t have if you pay for some items such as your uniform out of pocket and things your employer later reimburses you for the expense to list that reimbursement as income.

All this seems like a lot to think about on top of your employment. The key to staying on top of things is to keep good records, even for items you doubt will be listed as deductions. It is best to be safe rather than sorry.

About the author

Microsoft 365 Team

The Microsoft 365 team is focused on sharing resources to help you start, run, and grow your business.

Get started with Microsoft 365

It’s the Office you know, plus the tools to help you work better together, so you can get more done—anytime, anywhere.

Buy Now
Related content
Manage my business

Saving taxes with an S Corporation

Read more
Manage my business

What it means to incorporate a business

Read more
Manage my business

5 tax-saving tips high earners can use to reduce their taxable income

Read more
Manage my business

How the self-employed can deduct health insurance costs

Read more

The Growth Center does not constitute professional tax or financial advice. You should contact your own tax or financial professional to discuss your situation.