At some point in an individual’s life, there may come a time when assisted living or memory care becomes necessary. The last thing anyone wants to worry about when searching for the right Denver assisted living community is the finances involved. You might find yourself wondering, “Are assisted living expenses tax deductible?”
It is always a good idea to be looking for ways to offset the costs. A few of these ways include long-term care insurance, community waivers, the use of rental insurance, or any kind of Veteran’s Aid. However, if these avenues are unavailable to you, there is always a potential for utilizing senior living tax deductions that you may qualify for.
What Is Assisted Living?
In general terms, assisted living is long-term housing and care for those with disabilities or health conditions who need help with certain daily life tasks. These tasks usually include:
- Bathing
- Eating
- Getting dressed
- Using the bathroom
- Mobility
- Continence management
Many assisted living homes offer 24/7 assistance instead of the intense medical care of most nursing homes. Assisted living residents also typically have options that include:
- Social activities, programs, or events
- Shared dining areas that create a social environment
- Private or semi-private living arrangements
Assisted living communities often care for older adults who may be living with conditions like:
- Cancer
- Kidney disease
- Depression
- Coronary artery disease
- Congestive heart failure
- COPD
- Schizophrenia
- Osteoporosis
- Stroke complications
- Multiple sclerosis
Memory Care in Colorado
Similarly to assisted living, memory care is a specific type of care where a resident requires assistance with at least two daily activities or suffers cognitive decline. A wide range of therapies and restorative services are usually available to improve the mental flexibility and memory of residents.
Memory care services are specifically geared to help senior loved ones cope with the difficulties and challenges that often accompany these conditions. A step just above assisted living, memory care is essential for those individuals living with conditions like Alzheimer’s or dementia. Thankfully, there are ways to offset the costs incurred with this care.
Chronic Illness Requirements
To deduct assisted living expenses from your taxes, there are certain requirements that must be met. First, the individual must meet specific health requirements. According to the IRS, a resident of an assisted living facility must be chronically ill to claim these expenses on a tax return.
There are two ways that a resident can meet this requirement. One, a doctor or a nurse can issue a statement that the individual is unable to perform at least two daily tasks on their own. The second way is to establish the fact that the resident is in need of supervision because of a cognitive condition like Alzheimer’s or other dementia forms.
Following either of these, the assisted living home must put a care plan in place. This explains the services that will be provided to the patient. The care plan must be drafted by a nurse, doctor, or social worker.
Other Requirements
When filing your taxes, you can either take the standard deduction or itemize all deductions. You may also qualify to deduct any assisted living expenses for your spouse. However, to do this, you must file a joint return.
You could also qualify to take deductions for any dependents, including elderly parents. The IRS requires that:
- They must receive more than half their yearly financial support from you.
- Their gross annual income must be less than $5,050.
- They are a U.S. citizen or legal resident of Canada or Mexico.
What Does and Does Not Qualify for a Deduction?
According to the IRS, the following qualify as deductible medical expenses:
- Activities related to daily living assistance
- Oxygen
- Surgeries
- X-rays
- Wheelchairs
- Lab fees
- Prescription medications
- Management of medications
- Transportation to and from medical care facilities
If you or a loved one is residing in an assisted living home due to specific medical purposes, you may also be able to look into deductions for lodging and meals.
However, keep in mind that unless it is for specific medical purposes, the following are not typically deductible:
- Social programs and events
- Private or semi-private living spaces
- Shared dining areas
FAQs
Q: Are Assisted Living Expenses Tax Deductible by the IRS?
A: According to the IRS, there isn’t one specific assisted living tax deduction available. However, you do have the option to deduct any medical expenses involved with assisted living arrangements if you qualify. To do so, you must be considered chronically ill and have a statement drafted and issued by a nurse, doctor, or social worker.
Q: Can I Deduct Assisted Living Expenses for My Parents?
A: In general terms, yes, the assisted living expenses of a parent are tax deductible if specific requirements are met. For residents with certain medical conditions, most things included in assisted living arrangements are tax deductible if you have written proof of these conditions that was issued by a medical health professional.
Q: Is Care for Dementia Tax Deductible?
A: According to the IRS, certain memory care assisted living costs qualify for medical deductions if you or your loved one is considered chronically ill. To be considered chronically ill, you or your loved one must meet certain requirements, such as the inability to complete at least two activities of daily life, like bathing or getting dressed without assistance.
Q: Are Nursing Home Expenses Deductible for Federal Income Tax?
A: For the most part, yes, some nursing home expenses are tax deductible. However, very strict restrictions and rules often apply. According to the IRS, medical costs that qualify as tax deductible are those incurred due to the diagnosis, treatment, care, mitigation, or prevention of disease. Meals, lodging, and medical costs can be tax deductible if they are used for medical purposes.
Rocky Mountain Assisted Living Is Here to Help
The process of paying for assisted living or offsetting its costs can be frustrating and confusing. However, it is possible to deduct some of these expenses if the individual meets chronic illness requirements, and you can itemize these deductions.
Financial conversations can always bring out stress, but knowing that your loved one is receiving the right care and support can mitigate some of these challenging feelings. Contact the team at Rocky Mountain Assisted Living today, and we can answer your questions and enable you to receive the services and help that you require.