Assisted Living Expenses and Their Deductibility
As seniors age and their health deteriorate, they often face high costs associated with assisted living facilities. These facilities can be a great way for seniors to receive the care they need and maintain a good quality of life, but the costs can be substantial. Many seniors and their families are curious about whether these expenses are tax deductible. The good news is that some assisted living expenses are tax deductible, but it is important to understand the requirements and restrictions that come with this deduction.
Types of Deductible Assisted Living Expenses
There are two main types of assisted living expenses that may be deductible on federal income taxes: medical expenses and long-term care expenses. Medical expenses are those that are incurred in connection with the diagnosis, cure, mitigation, treatment, or prevention of disease. Long-term care expenses are those incurred in connection with a condition that requires an individual to receive substantial and ongoing assistance with two or more activities of daily living, such as bathing, dressing, or eating.
Requirements for Deducting Assisted Living Expenses
In order to be able to deduct assisted living expenses on your federal income tax return, you must meet several requirements. First, you must itemize your deductions rather than taking the standard deduction. Second, you must be able to show that the expenses you are claiming are directly related to medical care. Third, you must be able to show that the expenses you are claiming are not reimbursed by insurance or any other source. Finally, you must be able to show that the expenses you are claiming exceed 7.5% of your adjusted gross income.
Examples of Deductible Assisted Living Expenses
Some examples of assisted living expenses that may be tax deductible include:
- Room and board costs at a nursing home or assisted living facility that is considered medical expenses
- Home modifications made for medical reasons, such as adding a wheelchair ramp or grab bars in the bathroom
- Home health care services, such as nursing or physical therapy, that are prescribed by a doctor
- Durable medical equipment, such as hospital beds, oxygen equipment, and wheelchairs
- Transportation costs to and from medical appointments
It is important to note that not all assisted living expenses are tax deductible. For example, expenses related to cosmetic procedures, such as teeth whitening or hair transplants, are not deductible. Additionally, expenses for services not related to medical care, such as recreational activities, are also not deductible.
Keeping Records of Assisted Living Expenses
In order to claim assisted living expenses on your tax return, it is important to keep accurate and detailed records of all expenses. This may include receipts, invoices, and bills related to the expenses. It is also a good idea to keep a journal or log of all medical appointments and any related expenses, such as transportation costs.
In conclusion, assisted living expenses can be a significant burden for many seniors and their families. However, some of these expenses may be tax deductible, providing some relief to those who are facing these costs. It is important to understand the requirements and restrictions associated with these deductions, as well as to keep accurate records of all expenses in order to claim them on your tax return. If you have any questions about whether your assisted living expenses are deductible, it is best to consult a tax professional for guidance.
We hope you feel inspired and ready to take the next step toward your goals. If you’re looking for a partner in your journey, we’re here for you. Our team is available to talk and offer support, advice, and encouragement. Give us a call at Willow Haven Senior Homes at (317) 207-0002 and let’s connect. So don’t wait, make the call today and let’s get started.