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All too many times overwhelmed caregivers are physically and emotionally depleted and need to take time to rest and care for themselves. Believing in a holistic approach to caregiver stress and a strong commitment to helping our members find the right solutions, we created this blog to help you connect with others who, like you, may be facing the same eldercare issues and challenges. Feel free to comment, ask questions, and submit articles. Please forward the blog link to your family and friends. They'll be glad you did.

Warm regards,

Patricia Grace
founder & CEO
Aging with Grace

Monday, January 26, 2009

Is Assisted Living Tax Deductible?

With so many seniors living in Assisted Living communities across the United States and many of them paying their monthly fees with their own financial resources, it is important to know that some or all of their costs may be tax deductible.

These are the basic rules concerning the tax deductibility of assisted living expenses:

  • According to the 1996 Health Insurance Portability and Accountability Act (HIPAA), “long-term care services” may be tax deductible as an unreimbursed medical expense on Schedule A.
  • Qualified long-term care services have been defined as including the type of daily “personal care services” provided to Assisted Living residents, such as help with bathing, dressing, continence care, eating and transferring, as well as “maintenance services”, such as meal preparation and household cleaning.
  • Assisted Living residents seeking tax deductions for their services must qualify as “chronically ill”. This definition refers to seniors who are unable to perform two or more “Activities of Daily Living” (eating, transferring, bathing, dressing and continence) without assistance, or who need constant supervision because of a “severe cognitive impairment” such as Alzheimer’s disease or related dementias. The Assisted Living resident must have been certified within the previous 12 months as “chronically ill” by a licensed health care practitioner.
  • In order to qualify for a deduction, personal care services must be provided pursuant to a plan of care prescribed by a licensed health care practitioner. Many Assisted Living communities have on staff a licensed nurse or social worker who prepares a plan of care, sometimes called a “Wellness Care Plan,” in conjunction with the resident’s physician which outlines the specific daily services the resident will receive in the community.
  • In order to take advantage of deductions, a taxpayer must be entitled to itemize his or her deductions. Additionally, long-term care services and other unreimbursed medical expenses must exceed 7.5% of the taxpayer’s adjusted gross income. (Generally, a taxpayer can deduct the medical care expenses of his or her parent if the taxpayer provides more than 50% of the parent’s support costs.)
  • For some Assisted Living residents, the entire monthly rental fee might be deductible, while for others, just the specific personal care services would qualify for a deduction.

Assisted living residents and their adult children should speak with their own income tax advisors to get clarification about their personal situation. For more information See IRS Publication 502 or visit www.irs.gov

7 comments:

  1. Great information. I had no idea. I listened to the end of your radio program last night and your guest provided really good information.

    Thanks
    Jayne O
    Albany,NY

    ReplyDelete
  2. The women on your program was awesome. I can't believe all of the information that she provided. I have already contacted her for help.
    I am so glad that I found your website and this blog.
    D.Angelo
    Fort Lee

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  3. Great info,thanks

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  4. I'm really happy that my union offers your program. I work for the government and before they started working with you we have never received such great information on eldercare.

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  5. Thank you for this great information. My cousin found you on BlogTalkRadio and listened to your program. Good financial information at a time when people need it most.

    GR
    Tulsa

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