Tax Deductions for Assisted Living
Did you know that there are tax deductions available to seniors living in assisted living? You may be entitled to deduct expenses for medical services and some long-term care expenses. We’ve put together a comprehensive guide to get you started on what to discuss with your CPA or personal tax advisor.
Medical Expense Tax Deductions
Medical expenses that fall within your level of care at Renaissance Villages can be tax deductible. A doctor or nurse must classify the senior as “chronically ill” within the last 12 months for your care plan to be deductible. To qualify for this classification, the resident must meet one of the following requirements.
- The senior cannot perform at least two of their activities of daily living. Which includes transferring, grooming, bathing, toileting, eating, etc.
- The senior resides in our memory care villas or has severe cognitive impairment such as Alzheimer’s disease or dementia.
To qualify for the deduction, a licensed health care provider must prepare a plan of care that outlines in detail what services the resident will receive each day. We prepare care plans for each of our residents. However, the medical expenses must be itemized on their tax returns. (Please note Renaissance Village provides itemized care on each monthly statement). Additionally, the medical expenses must be more than 7.5% of your adjusted gross income (This does not include costs covered by insurance).
Room and board do not generally fall under tax deductibility. However, it can be deductible to a limited extent. It’s best to discuss this as well as your IRS Tax Publication 502 eligibility with your CPA or personal tax advisor.
Dependent Qualification for Tax Deductions
Caregivers who are also family members may also qualify for a tax break when paying medical expenses on their loved one’s behalf. To be eligible for a medical expense deduction the resident must be their dependent and the family member must be paying for a minimum of 50% of the senior’s living expenses. Medical expenses exceeding 7.5% of their adjusted gross income are eligible for tax breaks.
Other Financing Opportunities for Senior Living
Other opportunities for financial planning that also make senior living more affordable include veteran’s benefits, veteran discounts offered by Renaissance Villages, and long-term care insurance.
PLEASE NOTE: Renaissance Villages does not specialize in tax advice. Therefore, all information above should be discussed with your CPA or personal tax advisor as each individual’s circumstances vary. We recommend talking about this with professionals who specialize in aging services.