Suppose you or a member of your family lives in an assisted living facility. In that case, you know that living expenses are still rising every year. However, did you realize that tax deduction may be possible for some of those costs?
Medical expenses are deductible, including some fees for long-term care, where your adjusted gross income is more significant than 7.5 percent of your expenses.
The resident must be considered chronically diseased if assisted living expenses are to be tax-deductible. This signifies that a physician or nurse has confirmed the resident:
● Could not carry out at least two daily living tasks such as eating, toilet, transfer, bath, dressing, or continuity
● Checks for cognitive disorders (such as Alzheimer’s disease or another dementia), resulting in the need for supervision
In addition, personal services shall be delivered under a healthcare plan prescribed by a licensed healthcare provider to qualify for the deduction. This means that a physician, nurse, and social worker must write a plan outlining the daily services that the resident receives. While not required by legislation, most assisted residential institutions develop residents’ care plans.
In general, only the medical part of the supported costs of life can be deducted, and the typical cost of living such as lodging and boarding cannot be removed. However, in chronic illnesses, the room and board fees may be deductible in the medical facilities.
This is how they would be treated in a hospital if treatment were mainly for medical care and is carried out according to a recognized care plan. If the resident is in custody and in a non-medical-care-assisted living institution, charges are simply limited. In any case, if insurance or other programs reimburse them, the cost may not be deductible.
The percentage of their expenses, including entrance or initiation fees, may still be deducted for non-chronically ill residents. The supporting living facility is responsible for informing residents of the price due to medical costs.
Adult children may also be charged a tax deduction where they live in an aided residence and qualify as dependents for their parents or other immediate family members. The family member must be an American citizen, legal resident, or resident of Canada or Mexico.
More than half of the family member’s support must be provided by the children for each year. Every child may still be entitled to a deduction if it is eligible to contribute to the aid of a family member under a “Multiple Support Agreement.”
Even if the child does not pay more than half of the total amount of support of the member for one year, the adult child must pay more than 10 percent of the whole consent throughout the year. Together they should provide over half of the resident’s assistance to those who also support the resident. All supporters must agree and sign a declaration of multiple support.
These Are the Main Guidelines Regarding Assisted Living Tax Deductibility:
● The “long-term care services” may be tax-deductible as unreimbursed medical costs, according to the Health Insurance Portability and Accountability Act of 1996. The definition of qualified long-term care services is that of the kind of daily “personal care services.” These services include aid for bath, dressing, care for continuity, eating and transferring, and the type of “maintenance services” for assisted residents such as meals preparation and cleaning of houses.
● Assisted residents applying for tax deductions for their services had to be described as “chronically ill.” Seniors who cannot do two or more daily activities or who need continual supervision due to a “serious cognitive impairment” are not supported. Alzheimer’s and other associated dementias are examples of impairments which are not supported. The resident in assisted living must have been certified by a professional health practitioner as “chronically sick.”
● Personal care services must be given in accordance with a healthcare plan set by an authorized health practitioner to qualify for the deduction. In conjunction with Avec le resident’s healthcare specialists, many assisted living centers are provided with a qualified health care professional or social worker who produces care plans. These care plans are sometimes called “Wellness Care Plans.”
● A taxpayer must have the right to detail their deductions to take benefit of deductions. Furthermore, services for long-term care and other unreimbursed medical costs shall surpass 7.5 percent of adjusted gross incomes for the taxpayer. (In general, if the taxpayer provides more than 50 percent of parent support costs, a contributable can deduct their parent’s health care expenditures.)
● Some residents of assisted living may be subject to the total rental price for months. In contrast, others may be subject to a deduction from only the specified personal care services.
Assisted residents and their adult children should contact a tax consultant about their situations. Many directors at senior living residences cannot provide exceptional tax advice.