When it comes to taking care of our loved ones, we want to ensure that they receive the best possible care. This often means considering assisted living for their needs, which can come with a hefty price tag. However, did you know that some of these expenses may be tax deductible?
A portion of assisted living expenses may qualify as tax-deductible. This typically applies when the care is primarily for medical reasons, as stipulated by tax regulations. If a physician certifies that residential care is necessary for preventing or treating a physical or mental illness, then certain costs can potentially be included as deductible medical expenses.
What Is Assisted living?
An assisted living (also known as an assisted living or residential care community) is a residence for individuals who require assistance with daily activities such as bathing, dressing, medication management, and meal preparation. These communities offer 24-hour supervision and support services, allowing residents to maintain a sense of independence while still receiving the necessary care they need.
Qualifying for Tax Deductions
As mentioned above, for assisted living expenses to be tax deductible, they must primarily be for medical reasons.
This means that the individual must have a physical or mental condition that requires them to reside in assisted living. This condition must be certified by a physician, and the individual’s medical expenses must exceed a certain percentage of their adjusted gross income (AGI).
Additionally, assisted living must provide continuous or intermittent nursing care as part of its services for the expenses to qualify as deductible medical expenses. This can include assistance with medication administration, wound care, and other medical needs.
What Expenses Can Be Deducted?
The following are some examples of expenses that may potentially qualify as tax-deductible when residing in a assisted living:
- Meals and lodging
- Personal care services, such as assistance with bathing, dressing, and grooming
- Medications and medical supplies administered by the assisted living staff
- Transportation services provided by the assisted living for medical appointments or treatments
- Physical, occupational, or speech therapy services received at the assisted living
It is important to note that if an individual resides in a home primarily for non-medical purposes, only the expenses related to actual medical care are eligible for deduction as medical expenses. The costs incurred for meals and lodging, unfortunately, do not qualify. Additionally, any portion of room and board fees that are deemed to be for non-medical reasons, such as social activities or recreational facilities, cannot be deducted.
How to Claim the Deduction
To claim a family member residing in a assisted living as a dependent, you need to fulfill the following criteria:
- The resident’s gross income must be less than $4,700.
- You must have provided more than half of the family member’s support for the year. Note that insurance and government payments to the facility on their behalf must be included in the 50% support calculation.
- The family member must be a US citizen or a legal resident of Canada or Mexico.
Other Considerations
If you or a loved one is considering moving into assisted living primarily for medical reasons, it’s important to keep in mind that the expenses may not be fully deductible. The IRS may consider it a personal choice to live in assisted living rather than having medical necessity, and therefore, only certain expenses related to medical care can be claimed.
Reimbursements
It’s also important to note that if you receive reimbursement for any of your assisted living expenses through insurance or other sources, you cannot claim those expenses as a deduction. This includes any expenses covered by Medicare or Medicaid.
Navigating Finances at Juniper Communities
If you or a loved one is living in assisted living, it’s important to be aware of the potential for deductibility and keep track of all related expenses.
Additionally, it’s wise to consult with a tax professional or financial advisor to ensure you take full advantage of any available deductions and properly report your income and expenses. By doing so, you can potentially save money and alleviate some of the financial burden associated with assisted living expenses.
At Juniper Senior Living, we understand that every individual’s financial situation is unique. That’s why our team is dedicated to providing a transparent pricing structure and helping families explore all available options for financing senior living. We are committed to making the transition into assisted living as smooth and affordable as possible for our residents and their loved ones. Contact us today to learn more about our communities and the financial resources available.