Can You Claim a Tax Deduction for Assisted Living Expenses?
Assisted living expenses can be a significant financial burden for families, but did you know that you may be able to claim a tax deduction for these costs? With the right documentation and knowledge of the tax code, you can reduce your tax liability and receive much-needed financial relief.
Who is Eligible for a Tax Deduction for Assisted Living?
To claim a tax deduction for assisted living expenses, you must be paying for the care of a qualifying individual. This person must be either yourself, your spouse, or a dependent that you are financially supporting. In addition, the individual must require assistance with two or more activities of daily living, such as dressing, bathing, and eating, or have a cognitive impairment that requires supervision.
What Assisted Living Expenses are Eligible for a Tax Deduction?
Not all assisted living expenses are eligible for a tax deduction, so it is important to keep detailed records of your spending. Eligible expenses include room and board, medical care, and personal care services provided by the assisted living facility. Examples of medical care include doctor visits, medication, and nursing care. Personal care services include assistance with bathing, dressing, and eating.
It is important to note that expenses related to room and board, such as meals and laundry services, are only deductible if they are part of the overall assisted living package and are not separately billed.
How to Claim a Tax Deduction for Assisted Living Expenses
To claim a tax deduction for assisted living expenses, you must itemize your deductions on Schedule A of your federal tax return. In addition, you will need to provide documentation, such as receipts and invoices, to support your claim.
Suppose you are paying for the assisted living expenses of your spouse or dependent. In that case, you will need to include their medical expenses with your own on Schedule A. The total of all medical expenses must exceed 7.5% of your adjusted gross income in order to be deductible.
Maximizing Your Tax Deduction for Assisted Living
To maximize your tax deduction for assisted living expenses, consider the following tips:
- Keep detailed records of all eligible expenses, including receipts and invoices.
- Consider prepaying some expenses, such as the cost of an annual physical exam, to increase your deductions in the current tax year.
- If you are paying for the assisted living expenses of a spouse or dependent, consider transferring assets to them to increase their medical expenses and increase your tax deduction.
Claiming a tax deduction for assisted living expenses can provide much-needed financial relief for families. With the right documentation and knowledge of the tax code, you can reduce your tax liability and make assisted living a more affordable option. Make sure to keep detailed records of your expenses and consult a tax professional to ensure that you are taking advantage of all eligible tax deductions.
We understand that making big decisions can be overwhelming, but know that you’re not alone. Our Autumn Park Assisted Living team at 435-275-4458 is here to support you every step of the way. We care deeply about your success and are ready to listen to your needs and help find the best solution for you. Don’t let fear hold you back any longer. Reach out to us today, and let’s work together toward a brighter future.