It’s no secret that assisted living costs continue to rise because of inflation and the growing price of caring for senior citizens. However, did you know that some assisted living expenses may be tax deductible? It all depends on the type of care your loved one receives, as well as the amount of medical and long-term care expenses incurred.
Residents must be categorized as chronically ill to have their assisted living expenses be tax deductible. This means that a medical professional, such as a doctor or nurse, must have certified within the previous 12 months that the patient:
- Cannot individually perform at least two daily living activities, such as toileting, eating, dressing, bathing, and continence care.
- Or requires immediate supervision because of a severe cognitive impairment such as dementia or Alzheimer’s disease.
To qualify for tax deductions, all personal care services must be provided according to a treatment plan prescribed by a licensed healthcare practitioner. Most assisted-living facilities employ a licensed social worker or nurse who works with residents’ physicians to prepare plans that outline daily services to be received.
It’s important to note that, if an assisted living resident does not qualify as chronically ill, he or she may still be able to deduct the medical aspect of assisted living but not lodging and meals. The assisted living facility would need to break down the costs for you in such a case.
Tax-Deductible Medical Expenses
According to the 1996 Health Insurance Portability and Accountability Act (HIPPA), long-term care services such as assisted living services may be tax deductible if they’re classified as unreimbursed medical expenses.
Besides the personal care services and daily living activities listed above, maintenance services such as meal preparation and household cleaning may also be deducted as unreimbursed medical expenses. However, expenses are not deductible if they are reimbursed by insurance or other programs.
To take advantage of these sanctions, each deduction must be itemized. Unreimbursed medical expenses and long-term care services cannot exceed 7.5% of the taxpayer’s adjusted gross income (as of 2017). Medical expenses that can be deducted include:
- Paid insurance premiums, including Medicare Part B and D (not including Medicare Part A payroll tax)
- Payment for nursing services
- Medical fees from doctors and laboratories
- Long-term care, including housing, food, and other personal costs if the resident is chronically ill
- Cost of lodging and meals at a hospital or other facility where medical care is received, up to $50 a night
- Dental treatments
- Cost of transportation to and from medical appointments
- Personal care items such as food for a special diet or disposable briefs
- Prescription medications
- Therapy for medical treatment
- Artificial limbs and teeth
If you have a parent in an assisted living facility, you can qualify for a dependency deduction if you pay more than 50% of his or her support costs. To qualify as a dependent, he or she cannot have a gross income of more than $4,050 (as of 2017) and cannot file a joint tax return with anyone else.
If your mom or dad doesn’t meet these requirements, you can’t claim the deduction but you can still deduct his or her medical expenses.
For More Information
For additional information or questions about deducting assisted living and medical costs, check out Publication 502 on the Internal Revenue Service website or seek the advice of a tax professional.
Learn more about assisted living in After55.com’s Assisted Living Guide.
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