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What portion of the assisted living care costs and out-of pocket medical expenses are tax deductible?

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My 93 yr old mother lives in a Memory Unit in Hawaii. Her facility has always sent a letter around tax time indicating what percentage or amount of her monthly resident fee would be deductible on her taxes. Maybe, ask the facility.
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The facility where my mom is sent me paperwork showing that we can deduct 60% of her bill as medical. She is Level 4 care.
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Generally your bill receipt will show what portion is considered "care level". This is the amount that is considered care. Unfortunately, our tax man told us that it has to be quite high to be claimed and then often makes little difference in our elders who have not much income.
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My dad and his wife both live in Assisted Living due to Dementia and they were able to use all of their rent and medication management as a medical expense after deducting 7.5% of the Adjusted Gross Income. I have a letter from their doctor on file stating it is necessary for them to live there (i.e. chronically ill due to dementia). Also, any out of pocket costs like co-pays for medication, doctor visits, specialists, dental, etc. I had to request a Rent Certificate from the AL facility but some of the expenses weren't listed (medication management, LOC), and also I had to ask for a separate one for my step mom (second tenant fee) which I didn't realize at the time so now I have to have an amendment because their taxes were already submitted. But it's worth it because it's a huge expense!

From the IRS website - under Long-Term Care (https://www.irs.gov/publications/p502#en_US_2019_publink1000178953)

Long-Term Care
You can include in medical expenses amounts paid for qualified long-term care services and certain amounts of premiums paid for qualified long-term care insurance contracts.
 
Qualified Long-Term Care Services

Qualified long-term care services are necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, rehabilitative services, and maintenance and personal care services (defined later) that are:
Required by a chronically ill individual, and
Provided pursuant to a plan of care prescribed by a licensed health care practitioner.
 
Chronically ill individual.An individual is chronically ill if, within the previous 12 months, a licensed health care practitioner has certified that the individual meets either of the following descriptions.
He or she is unable to perform at least two activities of daily living without substantial assistance from another individual for at least 90 days, due to a loss of functional capacity. Activities of daily living are eating, toileting, transferring, bathing, dressing, and continence.
He or she requires substantial supervision to be protected from threats to health and safety due to severe cognitive impairment.
 
Maintenance and personal care services. Maintenance or personal care services is care which has as its primary purpose the providing of a chronically ill individual with needed assistance with his or her disabilities (including protection from threats to health and safety due to severe cognitive impairment).

Hope this helps?!
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Only the cost attributable to medical care and not custodial care is deductible on the taxes. Then only the cost that is above 10% of the income is deductible when itemizing the tax return. With the tax law changes for 2018 and the standard deduction increasing so much it is difficult to find more deductions to be over the standard deduction.
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My husband’s care expenses were 60K last year and our tax lady said that the IRS allows only 7% can be claimed. Not much but better than nothing.
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Isthisrealyreal Apr 2020
You need to get a new tax preparer. That is not correct.

You should also have the NEW CPA look at doing an amended return for last year if the savings is worth the expense.
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For tax year 2019, the IRS allows all taxpayers to deduct the total qualified unreimbursed medical care expenses for the year that exceeds 7.5% of their adjusted gross income. (Beginning in 2020, the amount increases to 10% of AGI).

For example, if you have an adjusted gross income of $45,000 and $5,475 of allowable medical expenses, you would multiply $45,000 by 0.075 (7.5 percent) to find that only expenses exceeding $3,375 can be deducted. This leaves you with a medical expense deduction of $2,100 (5,475 - 3,375).

Other people here have said the facility will give you a document that shows 'care level' expenses. You need to ask for that document.

Here's some info from Turbo Tax:
Which medical expenses are deductible?
The IRS allows you to deduct preventative care, treatment, surgeries and dental and vision care as qualifying medical expenses. You can also deduct visits to psychologists and psychiatrists. Prescription medications and appliances such as glasses, contacts, false teeth and hearing aids are also deductible.
The IRS also lets you deduct the expenses that you pay to travel for medical care such as mileage on your car, bus fare and parking fees.
What's not deductible?
Any medical expenses for which you are reimbursed, such as by your insurance or employer, cannot be deducted. In addition, the IRS generally disallows expenses for cosmetic procedures. You cannot deduct the cost of non-prescription drugs (except insulin) or other purchases for general health such as toothpaste, health club dues, vitamins or diet food, non-prescription nicotine products or medical expenses paid in a different year.

Hope this helps sort things out.
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From https://www.irs.gov/pub/irs-pdf/p502.pdf

"Nursing Home You can include in medical expenses the cost of medical care in a nursing home, home for the aged, or similar institution, for yourself, your spouse, or your dependents. This includes the cost of meals and lodging in the home if a principal reason for being there is to get medical care. Don't include the cost of meals and lodging if the reason for being in the home is personal. You can, however, include in medical expenses the part of the cost that is for medical or nursing care."

To clarify, regular assisted living costs (aka room and board) are NOT deductible, only qualified medical costs associated with the AL are covered (I don't have details on what those are.) Memory Care assisted living IS deductible, so anything over the %age of AGI can be deducted. It is considered a medical necessity, where regular AL is not.

I highly recommend finding an Enrolled IRS agent to process your/her/his taxes. IF you are covering the cost of the facility, you can likely claim her/him as a dependent and therefore can deduct the cost of MC. If her/his funds are paying for the MC, her taxes can take the deduction. If Medicaid is involved, that is another whole topic, but an Enrolled IRS agent should be able to sort this out!

From IRS web site:
"An enrolled agent is a person who has earned the privilege of representing taxpayers before the Internal Revenue Service by either passing a three-part comprehensive IRS test covering individual and business tax returns, or through experience as a former IRS employee. Enrolled agent status is the highest credential the IRS awards. Individuals who obtain this elite status must adhere to ethical standards and complete 72 hours of continuing education courses every three years."

Go to https://taxexperts.naea.org/ and enter your zip code to get a list in your area. As stated above, they have to maintain good standing with the IRS and should know more than many tax preparers. Stay AWAY from places like HRB.

I did my mother's taxes until the year she moved to MC. I took her info to the Enrolled IRS Agent, needing help to ensure the MC cost was deductible and to process the Trust taxes (we set up a trust with most of her savings and later the proceeds from the sale of her condo. SS and pension cover less than 1/2 of the MC cost, so I have funds fed in as needed from the trust.) His fee was in line with others and once the first one processed, that year all the taxes withheld were refunded. I submitted a special no-tax status W4 to her pension once that was done (since I had to wait to see the outcome, she got a refund the next year for the 5+ months of withholding.) She now has NO taxes deducted and except for a small amount paid last year after the condo sale, she pays no taxes.

NOTE: The sale of the condo resulted in IRMMA jacking up her cost for Medicare, but the agent assured me that it will revert back again next year. You can look up IRMMA - basically if income is over 85k for 2019 or over 87k for 2020, the cost of Medicare goes up. They review every year, so it should revert back to the lower amount after any anomaly like mom's.
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Bear in mind that you can only claim medical expenses if they exceed 7.5% of your AGI (Adjusted Gross Income). In addition, that would mean that you would be filing an Itemized Deduction Return. Sometimes you will have to take the Standard Deduction depending on your TOTAL ITEMIZED DEDUCTIONS.
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