Is Assisted Living Tax Deductible?
The IRS acknowledges that costs related to assisted living communities can be quite a burden on seniors and their loved ones. Current tax laws are in place to allow eligible individuals to deduct a portion of assisted living expenses on their taxes.
Are Assisted Living Costs Tax Deductible?
Assisted living communities offer seniors as much independence as they want while knowing help is just around the corner. These environments are quite appealing both to potential residents and their loved ones, in most cases.
Assisted living communities offer a home-like atmosphere with living spaces that include studios and one-bedroom apartments. They essentially give seniors their freedom while having peace of mind, knowing a full staff is there to care for them if needed.
The good news is some assisted living expenses are indeed tax deductible. However, this will depend on whether or not the services qualify as medical care as outlined by IRS guidelines.
If the medical expenses exceed 7.5% of adjusted gross income (AGI) and are itemized, the expenses could ultimately be eligible for tax deductions. For example, a resident with an AGI of $50,000 in the past year can claim a deduction for the qualified medical care costs that exceed $3,750.
Which Assisted Living Expenses Qualify For Tax Deductions?
It’s vital to know only a portion of assisted living costs directly related to medical care are eligible for tax deductions.
Expenses directly related to room and board are usually eligible for deductions unless the certain individual is already receiving substantial medical care as part of their residency in the assisted living community. The IRS will typically define a qualifying dependent as either a parent, grandparent, mother, father in-law, or stepparent.
Assisted Living Costs That Can Be Written Off
In most cases, medical expenses account for a portion of both assisted living and memory care monthly fees. There are a few unique scenarios where residents can deduct the entire monthly fee, while most other residents are only able to qualify for a few specific deductions.
General expenses related to health, such as vitamins and fitness club fees, are not tax deductible. Here are a few expenses that can be written off:
- Health insurance premiums.
- Nursing services.
- Dental costs.
- Assisted living entrance fees directly related to medical care.
- Prescription drugs, which includes insulin.
- Travel expenses related to medical care.
- Meals and lodging during a hospital stay.
Tax Settlement in Mesa, Arizona
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