Our daughter,31, mentally ill, lived with us, earned 2K wages, and incurred 28K in care expenses in 2019. What is our audit risk if we declare her and deduct her medical?

[DoninGA]

Your audit risk for correctly claiming your daughter as a dependent, slim to none.

You should be able to claim her as a dependent under the Qualifying Relative rules if she meets the requirements.  If claimed as a dependent, her medical expenses that you paid with out of pocket funds are entered on Schedule A as an itemized deduction.

To be a Qualifying Relative -

1. The person cannot be your qualifying child or the qualifying child of any other taxpayer. A child is not the qualifying child of any other taxpayer if the child's parent (or any other person for whom the child is defined as a qualifying child) is not required to file an income tax return or files an income tax return only to get a refund on income tax withheld.
2. The person either (a) must be related to you or (b) must live with you all year as a member of your household.
3. The person's gross income for the year must be less than $4,200 (social security does not count) in 2019
4. You must provide more than half of the person's total support for the year.
5. The person must be a U.S. citizen or a U.S., Canada, or Mexico resident for some part of the year.
6. The person must not file a joint return with their spouse.