If you, your loved one, or your family are looking into a well established and affordable assisted living community, then you likely know about the average cost for assisted living. You’ve likely done research and heard of news of the fluctuating costs of assisted living, but you shouldn’t worry. The reason why is because there are ways to afford a better lifestyle without the financial strain on your wallet. One method is through knowing what elements of affordable assisted living can be deductible.
What Seniors in Affordable Assisted Living Need to Know about Tax Deductions
In 1996, the United States government introduced the Health Insurance Portability and Accountability Act (also known as HIPAA). This established that qualified long-term care services can be tax-deductible for qualifying senior individuals. These expenses however must be itemized and unreimbursed medical expenses. This includes qualifying long-term care services that a senior might have while living in a senior living space. This means that services like bathing, dressing, meal preparation, and other offerings are viable.
Still, there are some conditions a senior must have in order to qualify for these tax deductions. First off, they must be certified that they are chronically ill by a licensed health practitioner like a doctor or a qualified nurse. Currently, the definition of “chronically ill” is that of a senior who is unable to perform two or more daily activities without help (like bathing, eating, and other daily essential activities). A senior in affordable assisted living care may also qualify if they need consistent supervision from threats to their health and safety. One example of having a chronically ill status is having memory issues like Alzheimer’s or dementia.
Finally, in order for qualification of deductions, a list of the senior’s personal care services (that is prescribed by the certified professionals) must be submitted. Provided care must be outlined specifically and show exactly what the senior will receive. Thankfully most affordable assisted living places and other specialized communities keep track of these details.
What Can Be Deducted for Seniors in Assisted Living Care?
As stated before, personal care services and assistance for daily activities can be deducted. However, there are a number of services that can be deducted as well. Maintenance services like household cleaning and meal preparation can technically be deducted if they are not reimbursed by a senior’s insurance or other programs. For example, if you are part of a retired veterans program that offers to pay for your meals, it cannot be deducted.
Medical Tax Deductions for Assisted Living Seniors
Regarding medical expenses and tax deductions for seniors in affordable assisted living, there are a number of eligible deductibles. This includes the follow (but could change in the future due to federal changes and acts).
- Paid insurance premiums (mainly Medicare Part B and D).
- Nursing services.
- Medical fees for doctor visits and lab testing.
- Dental treatments.
- Cost of transportation to and from medical appointments.
- Prescribed medications.
- Medical treatment therapy.
- Wheelchairs.
- Prosthetic limbs and teeth.
These deductions are viable as long as these medical expenses are unreimbursed and the long-term care services don’t exceed 7.5% (as of 2018) of a senior’s adjusted gross income. Keep in mind that reforms do occur, and the percentages and qualifications could be lowered or raised at anytime. So it’s best for seniors to check every year before filing taxes.
Can the Family of an Assisted Living Senior Benefit from Tax Deductions?
In some cases, the adult children of those in affordable assisted living communities can get a tax deductions as well. The following must apply to those adult children.
- Their parents or immediate family members (including in-laws) must live in an assisted living community and qualify as a dependent under the adult children’s tax forms.
- The family member in the community must be a U.S. Citizen or a legal resident of Canada or Mexico.
- The adult children mustn’t provide more than half of the senior’s annual support. However they can still make deductions if they contribute via a “multiple support agreement”.
- The adult children must pay more than 10% of the senior’s support for the year. If they are supporting with others in the family (like another adult sibling), they must contribute more than half of the senior’s support. Additionally, all those support must agree and sign on a “Multiple Support Declaration”.
Filing taxes, whether your a senior in affordable assisted living or the adult children of a senior in care, can seem overwhelming. However, taking time to find what can and cannot be deducted can possibly save you hundreds or even thousands of dollars per year.