The financial responsibility of supporting yourself or a loved one through assisted living and long-term medical services can feel overwhelming or even burdensome at times. However, many people can rest a little bit easier knowing that there are some tax benefits available to help provide some financial relief to those families requiring comprehensive Littleton assisted living and elderly care services.
Ensuring that your loved one receives the proper care they need while also equipping yourself with a detailed understanding of the various tax benefits available to eligible Colorado residents can help you and your family plan accordingly as you assess the different options that make the most sense for your circumstances.
Who Qualifies for Tax Deduction?
In order to properly understand what long-term medical care expenses qualify for tax deductions, it is important to know what individuals are eligible for.
Typically, elderly citizens who move into a nursing home or assisted living facility will receive an assessment of their care needs and an individualized personal care plan from their doctor in order to classify them as chronically ill. To qualify as chronically ill, a person will have to require assistance with at least two of the following activities of daily living (ADLs):
- Eating
- Bathing
- Dressing
- Toileting
- Transferring
- Continence
Qualification for being classified as chronically ill also includes if you or your loved one needs substantial daily supervision due to cognitive impairment. This will often include expenses for memory care services.
What Care Expenses Are Eligible for Tax Deduction?
Because many of the services that your family members receive as part of their individualized personal care plan are medical by nature, it is not uncommon that most of those services are eligible for medical tax deductions. In addition, many of the other care tasks that your loved one receives, which may not seem blatantly medical in nature but still qualify as Activities of Daily Living (ALD), can also be classified as medical care and, therefore, be eligible for medical tax deductions.
Some of the common assisted living long-term care expenses that are tax deductible are:
- Assistance with Activities of Daily Living (ADL)
- Management of medications
- Transportation to and from the location where the individual receives medical treatment
- Different kinds of therapies that are included as part of a person’s medical treatment
It is important to note that you must save any invoices or itemized bills for all eligible medical expenses. For tax purposes, the invoice must clearly show which portion of the monthly payment goes toward the medical expenses. This applies whether you pay for one-time medical expenses or recurring monthly services for yourself or a dependent.
Also, not only medical services but some medically related devices and other equipment may be eligible for tax benefits. Some of the eligible equipment are:
- Hearing aids and hearing aid equipment repairs
- Eyeglasses and contact lenses
- Wheelchairs
- Oxygen and oxygen-related equipment
- Prescription medications
- Laboratory fees
- X-rays
- Surgeries that are not elective or for cosmetic purposes
This list does not include all of the different kinds of eligible devices and equipment, so it is very important to keep a record of all your medically related purchases to see if you are eligible for any medical tax breaks.
Can the Adult Child of the Parent in an Assisted Living Facility Get a Tax Deduction?
If your parents, in-laws, or any other immediate family members qualify as your dependent, live at a nursing home or assisted living facility, and are legal U.S. residents or citizens, then you would indeed qualify for a tax deduction. In order for your family member to qualify as a dependent, however, you must pay for more than 50% of their total living expenses.
FAQs
Q: What Percent of Assisted Living Expenses Are Tax Deductible?
A: In the state of Colorado, any medical expenses that are more than 7.5% of an individual’s adjusted gross income are eligible for a tax deduction, meaning that you deduct the medical-specific portion of your assisted living expenses but not other nonmedical assisted living expenses, such as room and board.
Q: Are Elderly Caregiver Expenses Tax Deductible?
A: Yes, elderly caregiver expenses are tax deductible in Colorado. As long as the caregiving costs are primarily for medical use, then they would be eligible for tax deduction as a related medical expense. However, your loved one must be your legal dependent, which means that they would need to either live with you or that you pay for more than 50% of their total living expenses.
Q: Can You Write Off Long-Term Care Expenses?
A: Yes, in Colorado, you are able to write off long-term care expenses if you, your spouse, or any dependents use long-term care (assisted living or nursing homes) primarily for medical care services. If they do, then the entire long-term care cost is eligible for tax deduction as a medical expense.
Q: What Is the IRS Deduction for Caring for Elderly Parents?
A: According to the IRS, the child and dependent care tax credit, which includes caregiving costs for elderly parents, will reimburse you for the cost of care for your parent while you work. Based on the exact amount that you spend, you can claim as much as $3,000 per person or $6,000 for two or more people. Despite what the name suggests, your elderly parent does not actually have to be your dependent in order for you to qualify for the tax credit.
At Rocky Mountain Assisted Living, we take pride in our personalized approach. It begins with treating you and your loved ones with compassion and ensuring that they receive the highest quality of care possible. We understand that the transition to assisted living can be difficult to navigate, but we are here to help. Feel free to give us a call for more information or schedule an in-person tour of any of our locations across Colorado, and we will be happy to walk you through the process.