Is assisted living Tax deductible

I have been looking at the taxes on income and if assisted living can be deducted. She does not have any earned income, of course, but the assisted living will be much more than her social security and pensions. I have researched this and have learned that not all assisted living, only the medical portion, can be deducted if it is more than her adjusted gross income(AGI). But I have also been told that 100 percent of her assisted living can be considered medical if it is more than 7.5 percent of her AGI. The assisted living center will be approximately 50 percent more than her AGI. I am going to talk to her accountant about it but just wanted to have a clear view of this before discussing it. Anybody have any ideas on this or know anything about it?

Andy

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Previous discussions here indicate the room and board part of assisted living is not deductible but related medical expenses count toward that 7.5%.

Some may know how strict IRS is in auditing returns that claim assisted living as a medical expense.

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Qualified medical expenses that exceed 7.5% of AGI are deductible.

Ask for a citation from the person who told you that. I doubt they will have one. From IRS Publication 502 2022 Publication 502 (irs.gov)

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Generally, residents in assisted living are there for personal care, not medical care. Therefore, only part of the expenses will be considered qualified medical expenses. The assisted living home should give you an itemization.

Again, it’s only the qualified medical expenses that matter, not the overall percentage of AGI.

AJ

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Thank you AJ and Paul, I knew I could count on you two. So the assisted living should be able to tell me the cost of care that will be allowed to be deducted correct?

Andy

I wonder if hospice care counts as “medical”? Even if you choose hospice for the last few weeks/months of life over hospital.

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They should be able to tell you which expenses are qualified medical expenses. How much is deductible is dependent on your mother’s AGI. Additionally, she would need to exceed her standard deduction to receive any benefit from a deduction.

AJ

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Thank you AJ, I really appreciate it.

Andy

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It would depend on the circumstances.

I will point out that one can be considered to be ‘in hospice’ in a care facility or in a hospital, not just at home, so I’m not sure that it’s really ‘choosing’ hospice over hospital. That said, if hospice care in someone’s home is consists of visits from medical providers and medications, those expenses would be qualified. Rental/purchase of medical equipment may also be qualified, if prescribed.

That said, insurance often covers medical provider visits and medications, and the portion that insurance reimburses is not a qualified medical expense.

AJ

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I am not familiar with the details of hospice care (thank God!), so I don’t know what the complete definition of the word/concept entails. But I have heard of many cases where the elderly person is in the hospital for various things, they clearly can’t live at home anymore, and medically get worse and worse. The family at some point chooses to move them out of the hospital into a hospice care facility (where people essentially go to die, though a very small percentage sometimes surprisingly get better and eventually leave the facility). They physically move the person from a bed in the hospital, into an ambulance/patient transport service, and then into a bed at the hospice facility. The family expects the person to die comfortably (meaning without all the hospital apparatus around, on, and in them) within weeks or months.

Unfortunately, I am. My mother’s expenses in hospice care at home were mostly covered by her medical insurance, so there weren’t any qualified medical expenses to deduct.

Again, very dependent on circumstances. In general, to be approved to be in hospice, both your physician and a hospice physician have to certify that you have a terminal condition, with death expected within 6 months, and you have to agree to only palliative care, rather than curative care. When those conditions are met, insurance will often cover the hospice expenses. Any expenses reimbursed by insurance are no longer qualified medical expenses.

AJ

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