Written by a parent, not a doctor. Nothing here is medical advice.

Childhood Cancer Lantern
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Federal, exists in every state

Tax refunds and treatment-related deductions

Federal tax credits can change when yearly earnings change. High unreimbursed treatment costs may also make a medical deduction useful.

What it is

Federal tax credits can change when yearly earnings change. High unreimbursed treatment costs may also make a medical deduction useful.

Tax credits phase in and out as earnings change. A tax preparer can check the earned income credit and child tax credit using your full tax-year income. A medical-expense deduction applies only to qualifying unreimbursed costs above 7.5% of adjusted gross income, and only when you itemize.

Rules
  • Kentucky offers a nonrefundable Family Size Tax Credit based on modified gross income and family size. Its child/dependent-care credit is 20% of the allowable federal credit under the applicable Kentucky return rules. A preparer checks the correct tax-year table, state conformity and care expenses on Form 740 or 740-NP; these are not automatic cancer benefits or a promised refund.
  • Only unreimbursed medical expenses above 7.5% of adjusted gross income are deductible, and only if you itemize. Mileage to treatment counts at the IRS medical rate (20.5 cents a mile through June 2026, 23.5 from July).
  • Refundable credits require a filed tax return even when no tax is owed.
  • KRS 141.019(2)(c) excludes the federal itemized medical-care deduction from Kentucky’s state-return calculation.
What you get
  • Federal credits, with refundable amounts when the rules are met.
  • Kentucky family and child-care credits when their tax-year rules are met.
  • A possible federal deduction for qualifying unreimbursed medical expenses.
What to keep
  • Every bill, insurance statement, parking, mileage and lodging record for treatment trips, from now.
If you decide to apply
  1. Keep treatment receipts, travel mileage and insurance statements for the tax year.
  2. Ask a free tax-help service (VITA) or qualified preparer to review credits and the medical deduction.

IRS tax help or a qualified tax preparer · Official page ↗

Missed years
  • Earlier tax years have their own deadlines. Kentucky’s Department of Revenue or a tax preparer can confirm filing dates, extensions and any relief for your return.
Good to know

Kentucky does not allow the federal medical-expense deduction on the state return. Credits and deductions work differently, and your tax-year income can differ from today’s benefit-screening income.

Other details
  • Federal credits and deductions change by tax year; confirm the year’s figures when you file.
Official sources
Ask your social worker

“Could a tax preparer check how treatment costs and our yearly income affect credits and deductions, explain the tradeoffs, and help us claim what fits?”

Why I’m asking: We want to claim any refund we are due in a year with different income and high bills.

More background and detailed requirements
Additional program information and published rules

Who does what

The three parts, side by side. The agency decides; nobody on this page does.

You

Keep the mileage log, parking and lodging receipts and every medical bill; file even in a year you owe nothing.

Your social worker

Points you to a free VITA tax site and, if a parent is paid by Medicaid for home care, to the paperwork that marks that pay as excludable.

The care team

Records and letters when the application asks for them.

Who decides
The IRS, on the return you file
Ask your social worker
“Is there a free tax help site for families here? If a parent is paid through Medicaid for our child's home care, what paperwork marks that pay as excludable?”

How to apply

First step: Start a mileage and lodging log now, keep every medical bill, and ask the social worker for the free VITA tax site near you.

  1. Start a mileage and lodging log the week of diagnosis.
  2. Ask HR about the dependent-care account when a sibling needs paid care so a parent can work.
  3. File even in a year with no tax owed; the child tax credit and earned income credit can still pay.

Where it starts: Federal tax return; free VITA tax sites for lower-income families

What to gather

  • A mileage log with dates and destinations
  • Parking, toll and lodging receipts
  • Every medical bill and the insurance statements showing what you paid
  • The employer's dependent-care account form, if offered

How long: Settled on the tax return for the year. A refund follows filing.

What a yes looks like

A smaller tax bill or a refund that reflects the deduction and the credits.

What a no looks like, and the next move

The standard deduction beats itemizing: the mileage and lodging are then unused, but the child tax credit and earned income credit still apply.

Watch out

  • Throwing away the mileage log. Hospital trips at 20.5 cents a mile (January to June 2026) and 23.5 cents (July to December), plus parking and tolls, add up over a treatment year.
  • The lodging cap is $50 a night per person, meals not included, and only for stays needed for care at a hospital.
  • The $7,500 dependent-care account is for care that lets the parents work, such as a sibling's daycare. It is set up through an employer, usually at open enrollment or after a family change.
  • Not every Medicaid-paid wage is excludable. The exclusion is for care of someone living in the provider's home under a Medicaid program; ask the program for its form.
  • Retirement money is a last resort with tax costs. A medical hardship withdrawal does not itself waive the early-withdrawal penalty. The medical-expense penalty exception covers only qualifying expenses above 7.5% of adjusted gross income; ordinary income tax still applies to untaxed money.
  • The emergency personal-expense withdrawal exception has separate balance, annual and repeat-use limits. Ask the plan administrator or tax preparer before using it; penalty relief is not an exemption from ordinary income tax.

The numbers and the rules

The arcane layer, kept on purpose. Checked September 10, 2026.

What it is worth

Medical costs above 7.5% of income deductible if you itemize; mileage 20.5 cents (January–June 2026) and 23.5 cents (July–December); lodging $50 a night per person; dependent-care account $7,500; child tax credit up to $2,200 a child.

  • $7.5 (only the part above this counts, and only if you itemize) — Medical-expense deduction floor
  • $20.5 — Medical mileage, January to June 2026
  • $23.5 — Medical mileage, July to December 2026
  • $50 (an accompanying parent counts; meals do not) — Lodging away from home for care, per person per night
  • $7,500/year — Dependent-care account (FSA) limit, 2026
  • $3,750/year — Dependent-care account limit, married filing separately, 2026
  • $2,200/year (maximum; not a guaranteed refund) — Child tax credit per qualifying child, 2026

Legal protection: Pay from Medicaid to a parent who provides the child's home care in the same home can be left out of federal income (IRS Notice 2014-7, since January 3, 2014) · That excluded pay can still be counted as earned income for the earned income credit, all of it or none · Parking and tolls count on top of the mileage rate

What it costs the family: None. A free VITA tax site or a preparer can run the numbers.

The eligibility facts, as published

Deduction
itemizers; unreimbursed medical costs above 7.5% of adjusted gross income
Dependent care account
through an employer plan; care that lets the parents work; limited by earned income
Child tax credit
per qualifying child; maximum $2,200 in 2026
Notice 2014 7
qualifying Medicaid waiver payments to a provider living in the same home as the person cared for; not every Medicaid-paid wage

Decisions this site cannot make: The tax return

Expect friction on: Receipts and a mileage log · Itemizing versus the standard deduction

The trap: Throwing away the mileage log. The rate is 20.5 cents a mile for January to June 2026 and 23.5 cents from July; parking and tolls are on top. The lodging cap is $50 a night per person, meals not included.

What changes by state: Nothing here is state law. Some states add their own credits; a tax preparer or a free VITA site can check.

Where I read this

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