The costs of assisted living facilities continue to rise for seniors and their families, leaving them struggling to make sure their loved ones are receiving the care they need and deserve. While it seems like sometimes there is just no relief from these rising costs, Western Suburbs elder law attorneys often advise their clients about tax deductions which may be available to them. Medical expenses (which include many long-term care expenses) that account for more than 10% of gross adjusted income for taxpayers under 65 and more than 7.5% of gross adjusted income for taxpayers 65 and older are deductible. However, there are many qualifications that must be met in order to receive these tax benefits.
When advising their clients, Western Suburbs elder law attorneys list the following criteria that must be met in order for them to receive the tax deductions:
- A care plan for personal care services must be put in place by a licensed health care provider such as a doctor, nurse, or social worker. While many assisted living facilities make care plans for their residents, do not assume this will always be the case.
- The senior must be deemed “chronically ill” by a health care provider, meaning they either need to have a cognitive impairment such as dementia or need assistance with at least two of the activities of daily living: eating, bathing, toileting, continence, walking (transferring), and dressing.
However, even if these conditions are met, there are still some matters that need to be clarified in order to receive the full benefit of the assisted living tax deductions. For example, room and board are typically not allowed as tax deductions – unless the senior meets the above requirements and is in the assisted living facility primarily to receive medical care, as the room and board is then considered a medical expense. In addition, any medical costs reimbursed by an insurance policy cannot be used when calculating the deduction.
Western Suburbs elder law attorneys advise that even if the seniors are in the assisted living facility for non-medical reasons, there are still some options for receiving tax deductions. Assisted living entrance fees are often counted as medical expenses for tax purposes, and assisted living facilities are required to outline the portion of their fees that are medical-related.
Adult children and family members that claim seniors as a dependent are sometimes eligible for assisted living tax deductions as well, once again as long as they meet certain criteria. The adult family members, either singularly or together, must contribute at least half of the senior dependent’s support for the year. If there are multiple family members supporting the senior, each contributing family member must pay more than 10% of the senior’s total support for the year and needs to sign a Multiple Support Declaration.
If you have questions about qualifying for the assisted living tax deduction, please contact our office at 630-908-2752 to see how we may help you.