Aging is surprisingly expensive. Many people underestimate their post-retirement healthcare costs in their financial planning, while others simply don’t have the money to put away. Is assisted living care tax deductible, the way medical care is? The short answer is “sometimes.”
The critical question is whether living at the facility is actually a medical need. There are many reasons to choose assisted living, including social benefits and safety. While it is true chronic isolation can trigger life-threatening depression, the IRS may not consider social contact medicine. A doctor may have to certify the resident is “chronically ill” and actually needs the facility’s services.
If the resident is paying the bills, they are eligible for a deduction. If a caregiver is paying more than half the bills or is part of a group of caregivers who together pay more than half, the caregiver gets the tax break. Remember, if you can deduct someone else’s care, you can also claim them as a dependent on your taxes.
Of course, the only way to get detailed and accurate tax advice is to consult a professional tax preparer or to contact the IRS. However, there are a couple of basic steps anyone can take to make tax time flow more easily. Above all, keep records of any expenditure that could possibly be a tax write-off. Even if living expenses themselves are not deductible, other costs, such as medical and dental bills, hearing aids and even health insurance premiums in some cases may be. It is better to have records you don’t need than to end up missing the records you do. If you have just started doing the taxes of someone who has been in assisted living for a while, getting a copy of last year’s return should help. You’ll be able to see what kinds of things were deductible last year and, since most people’s expenses are roughly similar from year to year, you’ll get a good idea of what should work as a write-off again.
To qualify for the assisted living tax deduction, medical expenses, including assisted living care, must meet a minimum percentage of the resident’s adjusted gross income, which is approximately 7.5 percent or 10 percent, depending on age. The tax payer must also be qualified to itemize his or her deductions. The facility itself may have to meet certain standards of documentation. There may also be other complications so consider seeking professional advice in order to keep your tax burden as low as possible. One bright spot for people in assisted living in Oklahoma City is Oklahoma has an income tax so it is possible the deductions could apply on both the State and Federal level.
For those not sure if they can afford assisted living care, tax write-offs can help ease the budget. You may have more options than you think. Consider reaching out to the Village at Oakwood, affordable assisted living in Oklahoma City. Deductible or not, the fun amenities won’t feel like medicine.