Home health aides and personal-care aides employed by an agency are entitled to FLSA overtime — a protection that has applied since the Department of Labor ended the third-party "companionship" exemption in 2015. That makes the 2025 overtime deduction available to them: the premium half of time-and-a-half is deductible, up to $12,500 ($25,000 joint).
Caregiving overtime is easy to accumulate and easy to overlook. Aides often cover long client shifts, string together back-to-back cases, and pick up hours when coworkers call out — and agency pay stubs, which blend regular hours, travel between clients, and overtime, rarely isolate the FLSA premium. An aide at $17/hour working 8 overtime hours a week for 45 weeks generates about $3,060 of deductible premium.
Agency-employed W-2 aides qualify on their FLSA overtime. Live-in caregivers and aides hired directly by a family have special FLSA rules — live-in domestic workers can be exempt from overtime, and direct-hire arrangements vary — so eligibility there depends on the specifics. Independent 1099 caregivers generally don't qualify. Where the deduction applies and 2025 missed it, a 1040-X recovers it through 2028.