Posted February 19, 2010

I am doing my taxes this week so it reminded me to post this.  I am not an accountant, I have to hire one because I could not even begin to figure out my taxes even if I used an EZ form.  So, I am not qualified to give you any advice on this subject.  But I can give you the link for the IRS form 502.

Tax deductions for the cost of assisted living?

I finally finished my taxes!  What a wonderful feeling to not have that looming over my head.  In fact the state of Illinois provided me with a refund in one week.  I e-filed it on Friday and had it by the very next Friday in my account!

All this tax talk got me to thinking about something that I sometimes mention to families I work with even though I don’t know that much about it. I have heard that the cost of assisted living can be tax deductible. So I decided to do a little research on the Internet. Since you can’t believe everything you read on the Internet, and since everyone’s situation is different you need to seek the advice of your CPA.  And a CPA I am not, just ask my CPA (who is awesome by the way if anyone needs a recommendation…)

Anyways, as you may all know, if you itemize your deductions on  Form 1040, Schedule A, you may be able to deduct expenses you paid that year for medical care (including dental) for yourself, your spouse, and your dependents.

You may deduct only the amount by which your total medical care expenses for the year exceed 7.5% of your adjusted gross income. You do this calculation on Form 1040 Schedule A in computing the amount deductible.

The cost of items such as false teeth, prescription eyeglasses or contact lenses, laser eye surgery, hearing aids, crutches,  and wheelchairs are deductible medical expenses.  And according to the IRS website medical expenses include insurance premiums paid for accident and health or qualified long-term care insurance. (Some websites I read disputed this.) More eligible medical tax deductions can be found on the IRS’s website

In the case of assisted living, you are paying for care but you are also paying for room and board.  So technically the room & board would not count toward the total medical expenses.  However, the entire amount would be if the person was classified as ‘chronically ill’ – An individual is chronically ill if, within the previous 12 months, a licensed health care practitioner has certified that the individual meets either of the following descriptions. He or she is unable to perform at least two activities of daily living without substantial assistance from another individual for at least 90 days, due to a loss of functional capacity. Activities of daily living are eating, toileting, transferring, bathing, dressing, and continence.  And while Alzheimer’s patients may not technically need help with their ADL’s they do require a substantial amount of care and guidance in order to insure their safety.

If you are paying for a patient to be in an assisted living care
facility for the above reasons, you may take the deduction from your
return. The patient must qualify by the above criteria and in addition
must be related to the payer.

Good to know as the costs of quality care are ever increasing and lately, incomes are decreasing.

Again, please consult an accounting professional if you are in this situation.  I am going to go spend my tax return and pump some money back into the economy by treating myself & my husband to a nice dinner.

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