1. For in-home care, you can only deduct the cost of nursing care. Nursing care does not have to be performed by a nurse, but it must be the kind of care provided by a nurse, such as asstistance with eating, dressing, toileting, bathing, and providing medication. The cost of companionship and other household services, like doing laundry and cleaning, would not be deductible. If the home care included these non-nursing services, you will have to adjust the amount you claim as a deduction.
2. For assisted living, you can only deduct nursing care, as above. The facility should be able to give you a breakdown. The entire cost is a deductible medical expense if you meet three tests.
a. The person is chronically ill as certified by a doctor, or has a cognitive impairment that makes them a danger to themselves or others if they were left alone.
b. The person requires assistance with 2 or more activities of daily living. ADLs are eating, bathing, toileting, continence, dressing, and transferring.
c. The care is provided according to a written care plan developed by a qualified social worker or medical professional and reviewed at least once a year.
Where you need to be careful with the husband's expenses is to show that he needs help with his ADLs and that there is a written care plan.
3. You can only claim expenses you paid as a medical expense deduction if you can claim your parents as tax dependents, or if you provide more than half their financial support and they are disqualified from being your dependents because of their income or because they file a joint return. However, since you say "big withdrawals" you probably don't meet this test.
However, I would treat the expense as being a gift from you to your parents, and then include the amount in your parents' medical expense deduction as if they paid it. Your father-in-law could pay you back for the gift, if you have power of attorney and that is consistent with his wishes.
