Tax Deductibility | Assisted & Senior Living | Dementia & Alzheimer's Care | Orange & San Diego County, CA
Tax Deductibility of Assisted Living
(from IRS Tax Publication 502)
You or the person paying for your care may be eligible to deduct certain assisted living costs as medical expenses on your federal tax return, depending on the type of services and the level of care required.
You are allowed to deduct the cost of housing and meals if you are living in a home or community for the elderly because you are chronically ill, unable to live alone and receive long-term care services there.
To qualify, these services must include help with two activities of daily living such as:
• Bathing
• Toileting
• Transferring
• Bathing
• Dressing and continence
A physician must certify that a resident is unable to perform at least two of these functions without assistance for at least 90 days. The IRS also allows the same deduction for people who require "substantial supervision" to maintain their health and safety because of a cognitive impairment. This may qualify the costs of housing and meals for residents in a secured unit, who need care because of Alzheimer's disease or other memory impairments.
The resident's medical condition determines qualification for medical expense tax deduction. A "plan of care letter" from the resident's physician is needed. Costs may be deductible by the resident or the person (adult child) paying for the resident's care if the resident is a dependent of the person paying for the services. A person generally qualifies as your dependent for purposes of medical expense deduction if:
• That person lived with you for the entire year as a member of your household or is related to you,
• That person was a U.S. citizen or resident, or a resident of Canada or Mexico for some part of the calendar year in which your tax year began, AND
• You provided over half of that person's total support for the calendar year.
You can include the medical expenses of any person who is your dependent even if you cannot claim an exemption for him or her on your return.
Please consult a tax consultant for clarification on your situation. See IRS Publication 502 at www.irs.gov
