Assisted living eventually becomes a necessity for many senior citizens. You may be considering moving your elderly parents to an assisted living facility yourself, but also hesitating due to the cost. Before you decide one way or another, you should first learn more about the potential of getting an assisted living tax deduction.
If cost is the number one reason why you’re thinking twice about potentially seeking assisted living care for your senior parents, it’s worth taking the time to review your options in-depth. You may be able to secure tax relief for your parents’ medical expenses.
In this article, we’ll talk more about the medical expenses of your older parents and how it can factor in your taxes. Re-examine how viable assisted living is as an option for your parents after developing a deeper understanding of how much it may cost.
Defining Assisted Living
Before we get into the conditions you must meet to deduct assisted living expenses from your taxes, it helps to first define what it is.
Per MedlinePlus, assisted living facilities help residents with their daily routines. As people get older, they may not do the same set of tasks they handled with no issue before. Tasks such as performing basic hygiene, cleaning around their home, and remembering to take their medication may become tougher due to their current condition.
Assisted living facilities can also vary in terms of what services they offer. Some offer a wider range of services compared to others.
Another way to think of assisted living facilities is they serve as an option for senior citizens who need more care but want to continue enjoying some form of independence. It’s a great compromise option for parents and their children who may not always see eye to eye about long-term care options.
The bottom line is that assisted living makes sense for a lot of people. For others, it may even be a necessity.
The good news for senior citizens and their relatives is that assisted living remains a reasonable option from a financial perspective. The availability of tax relief only serves to make it an even better option to consider.
The Conditions That Determine if Assisted Living Can Become Tax Deductible
Different medical expenses can be tax deductible. And yes, even the medical expenses that do not directly affect your health may become deductible depending on certain conditions.
The IRS has laid out the guidelines pertaining to tax deductible medical expenses. Let’s take a closer look at those guidelines and find out how they may affect the final cost of securing assisted living for your older parents.
Assisted Living for a Qualifying Relative
Obviously, your own medical expenses are tax deductible and the same for your spouse and children. You can also subtract the medical expenses of qualifying relatives from the final amount of taxes you need to pay.
Qualifying relatives include your siblings and their children. Your stepsiblings may also be qualifying relatives. A person who lived with you throughout the year may be a qualifying relative if the relationship you two shared did not violate any local laws.
The IRS also considers in-laws to be qualifying relatives.
Your parents can also be qualifying relatives for tax purposes. Notably, the siblings of your parents are similarly regarded, and the same for your grandparents. You can also list your stepmother or stepfather as your qualifying relatives to secure an assisted living deduction.
Assisted Living for a Chronically Ill Qualifying Relative
The payments you make to an assisted living facility don’t automatically become tax deductible simply because they are related to a qualifying relative’s medical expenses. The IRS notes that you must meet additional conditions before the expenses become tax deductible.
To find out if the expenses can be deductible, you first need to ask if they are covering someone who is chronically ill.
How can you check if your relative qualifies as chronically ill? The agency also lays out definitions for that.
According to the agency, they consider a person chronically ill if a licensed healthcare professional finds they are incapable of performing at least two daily activities without assistance from someone else for a period of at least 90 days. The person in question may no longer perform those activities due to some loss in capacity.
To eliminate confusion, the activities the IRS is referring to are bathing, continence, dressing, eating, toileting, and transferring.
They consider the person chronically ill if they need plenty of supervision because their current mental state could be a genuine risk to their health.
Older individuals with dementia may have trouble watching over themselves because they get confused and disoriented easily. Increased supervision may be needed to prevent the person in question from getting into an accident of some kind.
It’s a good idea to get your loved one checked by a doctor before you plan to check them into an assisted living facility. Apart from learning about their status, going to the doctor also fulfills one of the IRS’ conditions. The agency notes that a person must be deemed chronically ill within the previous 12 months by a licensed healthcare professional if you wish to secure the assisted living deduction.
Assisted Living Is Prescribed by a Licensed Healthcare Professional
You can still deduct the expenses from your relative’s stay in an assisted living facility even if they were not chronically ill. That is the case if their doctor prescribed a stint in an assisted living facility as part of their recovery plan.
Doctors won’t always prescribe a stay in an assisted living facility, but that may be necessary given new health issues your relative is currently dealing with. Your relative may have been injured recently and be why they are struggling to perform certain daily activities.
The Percentage of Your Income That Goes to Assisted Living Payments
You can start deducting medical expenses from your overall tax payments if they meet a certain threshold related to your income. To be more specific, the IRS says that “only the part of your medical and dental expenses that is more than 7.5% of your adjusted gross income” qualifies as tax deductible.
That deductible can prove to be a huge help come tax season. Every little bit helps when it comes to funding care for your older relatives, so having that deductible there makes a huge difference.
How to Calculate the Tax Deductible from Your Assisted Living Expenses
Calculating taxes can be a tricky chore, and we wouldn’t blame you if you wanted to leave that task up to an accountant. However, if you need to find out how much your medical expenses, including the assisted living, will be immediately, you must handle the math on your own.
The good news is that the calculations here are not complicated.
You can start by solving your qualified assisted living expenses first. Check to see if the assisted living expenses you incurred qualify as tax deductible per the conditions we’ve already talked about. Remember that it must comprise more than 7.5 percent of your adjusted gross income to qualify.
After determining the living expenses, you can now make additions. You want to add the cost of the assisted living stay to your other qualifying medical expenses. Note that number for now.
Next, you determine what is 7.5 percent of your adjusted gross income. Write that number down as well.
At this point, you can take the number indicating your qualifying medical expenses and subtract that from the other number that you got after calculating for 7.5 percent of your adjusted gross income. The final answer you eventually come up with is your medical expense deduction.
Remember to account only for the expenses for the year. You may accidentally throw your calculations off by including the expenses that are well-beyond the right tax year.
What Are Other Tax Deductible Medical Expenses?
A stay in an assisted living facility is not the only tax deductible medical expense. You may also secure some tax relief for other essential products and services that your older relatives need.
Let’s check out some of the other notable tax deductible medical expenses below.
Medicine and Drug Expenses
People often pay significant amounts of money to obtain the different forms of medication they need. If your older relative has a variety of chronic conditions, getting all the forms of medication they require can get expensive in a hurry.
Writing off some of your purchases may help, though. The IRS allows you to write off purchases of drugs and medicines that were prescribed by a doctor.
Insulin can also be a write-off even without a prescription, but that’s the only one that qualifies in that way. Every other medicine or drug you buy, a doctor must prescribe it before you can include it among your medical expenses for the year.
You can deduct expenses that go towards addressing the dental care of your older relative. Specific dental expenses that qualify as tax deductible are the ones that either alleviate or prevent dental diseases.
Dentures, fillings, and even X-rays count as deductible expenses. You can deduct teeth cleaning done by a dentist too.
Eye Treatment Expenses
Eye problems are common among the older members of the population. Your older relative may even be dealing with them now.
Eye treatment can be expensive, but you should know that certain forms of it are tax deductible.
You can write off the expenses that went towards paying for new glasses or contact lenses. Surgical procedures are covered too.
Hearing Aid Expenses
Developing hearing issues is one of the common signs of aging. Hearing aids can help address the problems stemming from that aging-related concern.
You can get deductions for new hearing aids that you purchase for your older loved ones. Apart from the hearing aids themselves, you can also write off expenses related to maintaining, repairing, or purchasing batteries for them.
Some older individuals need to use a wheelchair to get around due to persistent conditions that have taken away their mobility. Count the cost of that wheelchair as another medical expense that you can write off. Aside from the wheelchair purchase, you can deduct the money you put into maintaining the wheelchair from the taxes you pay.
Chiropractic care can be helpful in situations where older people are dealing with strains and joint discomfort. The techniques used by chiropractors excel at relieving pressure on certain parts of the body. By alleviating that pressure, the patient can find comfort from their nagging pain while also seeing their range of movement improve.
Older adults may find the relief they’ve long been seeking following a visit to the chiropractor. Keep in mind that you can also write off that visit in your taxes.
Diagnostic Device Expenses
To monitor chronic conditions, some folks may opt to buy test kits. Blood sugar test kits are probably among the ones most used by senior citizens. Feel free to purchase one of those test kits to keep track of your relative’s disease easier.
Are you worried about the cost of checking your older relative into an assisted living facility? That’s an understandable concern. Remember that assisted living becomes more affordable after you write it off as a tax deductible.
Contact us at Lakeside Manor if you want your loved one to stay in an affordable yet dependable assisted living facility. Feel free to get in touch with us or drop by our facility to learn more about our services.