Deductions for nursing-home care fall into a gray area of the tax law. The types of expenses that can be taken as medical deductions depend on the reasons for being in the nursing home. Guidelines: •Fully deductible. The entire cost for nursing home care including meals and lodging—is Deductible if a principal reason for being in the home is to receive continual medical services. •Partly deductible. In situations where medical need is not a principal reason for being in a nursing home, expenses attributable only to medical care can be deducted.

If you were in a nursing home because you are too frail to care for yourself, you would not be able to deduct the cost of meals and lodging at the home. However, you could deduct the cost of any medical services received while in the home. Ask the nursing home operator to break the bills down into medical and non-medical care.

•Lump-sum payments. In some cases, a lump sum fee is paid for lifetime care in a nursing home. The home should be able to provide you with a statement detailing the portion of the fee that will be required for the a patient's future medical care, based on the nursing home's past experience. This amount is generally deductible in the year it is paid—even though it is for future medical care.

•Dependents' medical expenses. You may deduct medical expenses that you pay for your spouse or a qualifying dependent. Your parents or other relatives generally qualify as your dependents if you could claim a personal exemption for them on your tax return. Note: The gross income test, which says that a dependent must earn less than $2,500 for 1995, does not apply when claiming a dependent's medical expenses. The person must be your dependent either at the time care was received or when the expenses were paid.

•Nature of services. Whether or not an expense is deductible is determined by the nature of the services provided, not by the qualifications or experience of the provider.

Assume you broke your hip and hired domestic help. •lf that person also helped with your in-home physical therapy, you could claim as a medical expense the charges for the time spent on your exercises. It wouldn't matter if the provider were not a qualified medical professional, as long as the physical therapy program was for legitimate medical reasons and was prescribed by a doctor. However, the cost of having the same person do housework would not be deductible. The fact that your injury made you unable to do the housework yourself is irrelevant. Reminder: Medical expenses are only deductible to the extent that they have not been reimbursed by insurance and exceed 7.5% of your Adjusted Gross Income.