How Can Assisted Living Home Costs be Tax Deductible?

Posted by Mike McQuinn on December 18, 2013 | no comments

tax-write-offAssisted Living facilities can rise in cost every year, but did you know that some of those costs may be tax deductible? If medical expenses, including long-term care, are more than 7.5 percent of your adjusted gross income, they can be tax deductible. There are many other factors that go into deciphering whether or not the costs of assisted living are tax deductible. In this post I will explain these factors below:

The costs can be tax deductible only if the resident is considered chronically ill. This either means that the resident cannot perform two or more daily living activities (i.e. eating, bathing, etc.), and/or the resident requires supervision due to cognitive impairment. A nurse or doctor must certify that one or two of these illnesses are present in the resident. For those who are not chronically ill, some medical care expenses may still be deductible, including entrance and initiation fees. The assisted living community will be able to tell you which of your fees go towards medical expenses.

In addition to being chronically ill, it is imperative that you have a specific plan of care implemented. A doctor, nurse, or social worker must create a plan that outlines the specific daily services the resident will receive. These are usually called “Wellness Care Plans.” Most assisted living facilities prepare these specific plans when becoming a resident.

In almost all cases, the tax deduction only includes the medical expenses and not room and board, but if the resident is “chronically ill” AND in the facility for medical reasons only, room and board may be considered for tax deduction. In some cases they treat it as though you were in the hospital. If you are in an assisted living facility for custodial reasons and not medical, it may be tax deductible to an extent. Also, keep in mind that no matter what, if you are being reimbursed through insurance or other means, you will not be able deduct the cost from your taxes.

In some cases, if an adult child has a parent in an assisted living facility and qualifies as their dependent, they may get tax deductions as well. Even if the adult child is not paying more than half of the costs, they may still qualify by contributing to the family members efforts to support the resident, but the adult child must be paying more 10 percent of the total costs along with the other family members, they should be paying more than 50 percent in total.

Next time you are doing your taxes, remember that you may have a tax deductions that you never knew about. If you have any questions about tax deductions or are looking for an assisted living facility, contact The Manor on Marston Lake at (303) 932-9808 today!

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