You may be relieved to know that a portion, if not all the costs of assisted living and Alzheimer’s care is tax deductible. In a nutshell, it may be said that some expenses during long term care for seniors is tax deductible if the expenses crosses 10% of the adjusted gross income. For those above 65 years of age the limit is 7.5%. The eligibility for such tax deduction is that, the occupant must be certified as chronically ill. Here is a synopsis on the eligibility criteria and the amount of assisted living costs tax deductible.
To be certified as chronically ill:
• The occupant has to be unable to perform at least two daily activities that include toileting, eating, bathing, dressing, continence and transferring.
• The resident has to be under round the clock supervision due to an impairment which is cognitive in nature.
In order to get the tax benefit the resident has to receive specific services which are daily in nature under a specific plan that is known as “Wellness Care Plan” that must be prepared by a social worker, nurse or a doctor. Other rules that govern tax deduction for assisted living costs are as follows:
• Under Schedule A and according to the Health Insurance Portability and Accountability Act, 1996, only some specific daily services have been defined as qualified long term care that is provided to residents at an assisted living facility. The services include eating, bathing, dressing, continence, transferring and household cleaning.
• The tax deductions should be itemized by the tax payer in order to get advantage of the deductions.
• For certain residents of an assisted living facility the entire cost of long term care is deductible, while for others only the cost of some specific services is taken into consideration as deductions.
Here is a list of itemized expenses that is allowed as assisted living costs tax deductible.
1. Expenses on prescription drugs
2. Medical fees from health care providers, hospitals, laboratories and doctors.
3. Cost of transportation for receiving medical care.
4. Items for personal care such as food and disposable briefs.
5. Cost of home modification such as hand rails and grab bars.
6. Other costs that pertain to daily services as specified.
You can get more information from other sources, but the synopsis as given above can help you to calculate how nuch tax benefit you can get for he costs of assisted livng for your lovd ones.