Disclaimer: This blog is for general informational purposes only and does not constitute tax or legal advice. Tax rules are complex and individual circumstances vary. Consult a qualified tax professional or CPA before making any decisions about your tax return.
If you are paying for in-home care for an elderly parent or a disabled dependent, you may be able to recover a portion of those costs through the federal Child and Dependent Care Tax Credit - and in Ohio, through a state credit on top of that. Many families who qualify never claim it, either because they assume it only applies to childcare or because the rules around elderly and disabled dependents are less commonly understood.
This guide explains exactly how the credit works, whether home care qualifies, and what Cleveland-area families caring for aging or disabled loved ones need to know.
Key Takeaways:
- The Child and Dependent Care Tax Credit (CDCTC) can apply to home care costs for an elderly parent or disabled dependent - not just children
- To qualify, the person receiving care must meet IRS criteria as a "qualifying person," and the care expenses must be work-related
- For tax year 2025, the credit covers 20% to 35% of up to $3,000 in expenses for one qualifying person, or $6,000 for two or more
- The credit is nonrefundable - it reduces your tax bill but will not generate a refund
- Ohio offers a state CDCTC equal to 30% of the federal credit received
- BrightStar Care Cuyahoga West is a licensed home care agency that can provide the documentation families need when claiming this credit
What Is the Child and Dependent Care Tax Credit?
The Child and Dependent Care Tax Credit (CDCTC) is a federal tax credit designed to help working people offset the cost of care for a qualifying individual. Despite its name, it is not limited to childcare. It also applies to care expenses for disabled spouses and other dependents who are physically or mentally incapable of self-care - a category that includes many elderly adults.
The credit directly reduces the amount of federal income tax you owe, dollar for dollar. It is not a deduction, which only reduces taxable income. A $1,000 credit cuts your tax bill by $1,000.
For tax year 2025, the credit is nonrefundable, meaning it can reduce your tax liability to zero but will not generate a refund if the credit exceeds what you owe.
Does Home Care Qualify?
Yes - in-home care expenses can qualify for the CDCTC, provided several conditions are met.
The care does not have to be provided at a facility. According to IRS Publication 503, qualifying expenses include costs for care provided in the taxpayer's home, such as the cost of a home health aide or personal care worker looking after an elderly parent. The payroll taxes associated with these services may also qualify.
What matters is not where the care is delivered, but whether the expenses meet the IRS requirements outlined below.
The Four Requirements Families Must Meet
1. The Person Receiving Care Must Be a "Qualifying Person"
For purposes of this credit, a qualifying person includes:
- A dependent child under age 13
- Your spouse, if your spouse is physically or mentally incapable of self-care and lived with you for more than half the year
- Any other person who is physically or mentally incapable of self-care, lived with you for more than half the year, and either was your dependent or could have been your dependent except that they had gross income of $5,200 or more in 2025, filed a joint return, or you could have been claimed as a dependent on another return
That third category is the one most relevant to adult children caring for elderly parents. An elderly parent with dementia, a disability that prevents self-care, or a condition requiring constant supervision may qualify under this definition.
The IRS defines "incapable of self-care" as being unable to dress, clean, or feed themselves because of a physical or mental disability, or requiring constant attention to prevent injury to themselves or others. This definition covers many seniors with advanced Alzheimer's, dementia, severe mobility limitations, or other debilitating conditions.
The residency requirement is critical: the qualifying person must have lived with you for more than half the year. A parent living in their own separate home - even if you are paying for their care - generally does not qualify under this credit. The care must be for someone living in your household.
2. The Expenses Must Be Work-Related
The IRS requires that the care expenses be paid so that you (and your spouse, if filing jointly) can work or actively look for work. This is the "work-related" test. Care expenses are only eligible if they enable you to be employed or to seek employment.
This does not mean the expenses must be paid during work hours. It means the purpose of the expense is to allow you to work. A working adult child who pays for a home care aide to look after an incapacitated parent living in the same home during work hours satisfies this requirement.
Expenses paid while on vacation or for purposes unrelated to working generally do not qualify.
3. You (and Your Spouse) Must Have Earned Income
To claim the credit, you must have earned income from employment or self-employment during the year. If you are married and filing jointly, both spouses must have earned income, with exceptions for a spouse who is a full-time student or incapable of self-care.
Your work-related expenses eligible for the credit cannot exceed the lower of your earned income or your spouse's earned income.
4. The Care Provider Cannot Be a Restricted Party
The care provider cannot be your spouse, the parent of your qualifying child (if claiming for a child under 13), your own child under age 19, or anyone you or your spouse can claim as a dependent. A licensed home care agency like BrightStar Care Cuyahoga West satisfies this requirement, as do most professional independent caregivers.
You must report the care provider's name, address, and taxpayer identification number (EIN or SSN) on your return using Form 2441.
How Much Is the Credit Worth in 2025?
The credit is calculated as a percentage of your qualifying expenses, based on your adjusted gross income (AGI).
Maximum eligible expenses:
- $3,000 for one qualifying person
- $6,000 for two or more qualifying persons
Credit percentage by AGI (tax year 2025):
| Adjusted Gross Income | Credit Percentage |
|---|---|
| $15,000 or less | 35% |
| $15,001 to $17,000 | 34% |
| $17,001 to $19,000 | 33% |
| $19,001 to $21,000 | 32% |
| $21,001 to $23,000 | 31% |
| $23,001 to $25,000 | 30% |
| $25,001 to $27,000 | 29% |
| $27,001 to $29,000 | 28% |
| $29,001 to $31,000 | 27% |
| $31,001 to $33,000 | 26% |
| $33,001 to $35,000 | 25% |
| $35,001 to $37,000 | 24% |
| $37,001 to $39,000 | 23% |
| $39,001 to $41,000 | 22% |
| $41,001 to $43,000 | 21% |
| Over $43,000 | 20% |
Maximum credit values for 2025:
- One qualifying person, AGI over $43,000: $600 (20% of $3,000)
- One qualifying person, AGI under $15,000: $1,050 (35% of $3,000)
- Two qualifying persons, AGI over $43,000: $1,200 (20% of $6,000)
- Two qualifying persons, AGI under $15,000: $2,100 (35% of $6,000)
There is no upper income limit for claiming the credit in 2025. Higher earners simply receive a lower percentage.
Ohio State Credit: An Additional Benefit for Cleveland Families
Ohio taxpayers who qualify for the federal CDCTC are automatically eligible for the Ohio state credit as well. The Ohio credit equals 30% of the federal credit received.
This means Cleveland-area families can stack both credits to reduce their total tax burden. For example, a taxpayer who receives a $600 federal credit would receive an additional $180 Ohio state credit, for a combined $780 in tax savings.
The Ohio state credit is also nonrefundable and applies to the same qualifying expenses and persons as the federal credit.
What Expenses Qualify and What Doesn't
Generally qualifies:
- Fees paid to a home care agency for personal care, companion care, or skilled nursing services provided in your home
- Wages paid directly to an independent caregiver
- Payroll taxes you pay as a household employer for a caregiver in your home
- Meals and lodging provided to a caregiver as part of their employment
Does not qualify:
- Food, clothing, or lodging for the person receiving care
- Medical expenses (these may qualify for a separate medical expense deduction)
- Expenses for care provided outside the home when the qualifying person is not living with you
- Overnight or 24-hour care at a nursing home or facility (unless the qualifying person lives there and the facility is their primary residence, which is a different set of rules)
The Dependent Care FSA Interaction
Many working adults also have access to a Dependent Care Flexible Spending Account (FSA) through their employer, which allows pre-tax contributions to cover qualifying care expenses. For 2025, the FSA contribution limit is $5,000 ($2,500 if married filing separately).
You cannot double-dip. Any expenses reimbursed through a Dependent Care FSA cannot also be claimed for the CDCTC. You must subtract your FSA reimbursements from your eligible expenses before calculating the credit.
Example: You spend $6,000 on home care for two qualifying dependents and use a $5,000 FSA. Your remaining eligible expenses for the CDCTC are $1,000. At a 20% credit rate, your federal credit would be $200, plus the Ohio state credit of $60.
In many cases, the FSA saves more money than the credit alone because FSA contributions reduce your taxable income at your marginal rate. A tax professional can help determine the most beneficial combination for your situation.
Quick Reference: Does My Situation Qualify?
| Situation | Likely Qualifies? |
|---|---|
| Paying for home care aide for elderly parent living in your home | Yes, if parent meets incapacity and dependency tests |
| Paying for home care for parent in their own home | Generally no - residency requirement not met |
| Paying for care for disabled spouse living with you | Yes |
| Paying for nursing home for parent who doesn't live with you | Generally no |
| Both spouses working, paying for in-home care for incapacitated parent in your household | Yes, if all other tests met |
| Only one spouse working, other spouse caring for dependent at home | No - both spouses generally need earned income |
How to Claim the Credit
File Form 2441, Child and Dependent Care Expenses, and attach it to your Form 1040. You will need:
- The name, address, and EIN or SSN of each care provider
- The name and Social Security number of each qualifying person
- The total amount paid to each provider for each qualifying person
BrightStar Care Cuyahoga West, as a licensed home care agency, maintains records of all services provided and can supply the agency's EIN and documentation of payments to support your tax filing.
A Note on 2026 Changes
The One Big Beautiful Bill Act, signed in 2025, includes enhancements to the CDCTC that are scheduled to take effect for the 2026 tax year. These changes are expected to increase the maximum credit percentage, raise the expense limits, and expand income thresholds. Families should consult a tax professional or check IRS.gov for updated guidance when filing 2026 returns.
How BrightStar Care Cuyahoga West Supports Families
Understanding that home care may offset your tax liability is one more reason to consider professional in-home support for a qualifying loved one. BrightStar Care Cuyahoga West provides licensed, RN-supervised in-home care across Cleveland and Cuyahoga County, including personal care, companion care, skilled nursing care, and Alzheimer's and dementia care.
As a licensed agency, we can provide the documentation your tax professional needs, including our agency EIN and records of services rendered and payments received. We are also available to speak with your accountant or CPA if additional information about the nature of our services is helpful for your return.
If you are exploring home care options for a qualifying loved one and would like to understand what professional support looks like, schedule a free in-home consultation with our team. We serve families throughout Cleveland, Westlake, Parma, Strongsville, Lakewood, and surrounding Cuyahoga County communities.