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Your spouse's pension is still taxable income, even though it is being used to pay nursing home expenses.  You may be able to deduct part or all of the nursing home expenses as a medical expense itemized deduction.  The social security may or may not be taxable depending on your other facts and circumstances.

 

It will almost always result in less tax owed if you file as married filing jointly, this is still allowed even though she is in a nursing home.