Is Assisted Living Tax Deductible? Understanding the Tax Benefits of Assisted Living

Feb 28

Is Assisted Living Tax Deductible? Understanding the Tax Benefits of Assisted Living

Assisted living facilities provide a comfortable and convenient living arrangement for seniors and those who need additional support in their daily lives. But beyond comfort and care, did you know that assisted living expenses may also be tax deductible?

In this article, we will explore the tax implications of assisted living and what you need to know to take advantage of the potential tax benefits.

Medical Expenses and Assisted Living

The primary factor determining the tax deductibility of assisted living expenses is whether the expenses qualify as medical expenses. The Internal Revenue Service (IRS) allows taxpayers to deduct medical expenses if they meet certain criteria and if the expenses exceed a certain threshold of their adjusted gross income (AGI).

To qualify as medical expenses, the expenses must be necessary to diagnose, cure, treat, or prevent a disease, and they must not be reimbursed by insurance or otherwise.

Assisted living expenses may qualify as medical expenses if they are primarily for medical care, as defined by the IRS. This means that the expenses must be incurred with the diagnosis, cure, treatment, or prevention of a disease, or the management of a chronic illness.

Deducting Assisted Living Expenses on Your Tax Return

To deduct assisted living expenses, you must itemize your deductions on your tax return. You can do this by using Schedule A of Form 1040, which is the form used to itemize deductions.

When you itemize, you can deduct the amount of your assisted living expenses that exceed 7.5% of your AGI. So, if your AGI is $100,000, you would need to have $7,500 or more in medical expenses before deducting those expenses.

It’s important to keep accurate records of your assisted living expenses, including receipts, bills, and other documentation. This will help you accurately calculate the amount you can deduct and provide evidence to the IRS in case of an audit.

What Types of Assisted Living Expenses Are Tax Deductible?

The types of assisted living expenses that may be tax deductible include:

Monthly rent and utilities for the assisted living unit
Meals and snacks provided by the facility
Personal care services, such as bathing and grooming
Medication management and administration
Transportation to medical appointments
Special services, such as physical therapy, occupational therapy, and rehabilitation

It’s important to note that only the portion of your assisted living expenses that are for medical care are tax deductible. Expenses for non-medical services, such as recreation and entertainment, are not deductible.

Conclusion

Assisted living expenses may be tax deductible if they are primarily for medical care and meet the criteria set by the IRS. To take advantage of these potential tax benefits, keeping accurate records of your assisted living expenses and itemizing your deductions on your tax return is important. If you have questions about the tax implications of assisted living, it may be helpful to consult with a tax professional.

Don’t let the high costs of assisted living discourage you from considering this type of care. With the potential tax benefits, assisted living can be a more affordable option for those who need additional support in their daily lives. For more information, reach out today at 435-375-4501.