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Are Assisted Living Expenses Tax Deductible?
Date Updated: July 26, 2024
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With over a decade of dedicated experience, Andrea Miller boasts an extensive background in healthcare writing and editing. Her expertise spans various facets of the healthcare industry, with a particular focus on nursing, senior care, Alzheimer’s disease, and public health. Andrea has also contributed her editorial talents to reputable publishers in the Philadelphia region, complementing her extensive freelance work.
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Rachel is a skilled finance manager with a Master of Accounting and a Bachelor of Arts in English. With 10 years of experience in finance, she specializes in business, finance, law, real estate, and marketing. Rachel has worked in personal financial planning, wealth management, and tax accounting, serving senior clients, and has spent nine years in corporate financial planning and analysis. Currently, she manages finances for a Fortune 500 company in New York City.
Some assisted living expenses are tax deductible. The IRS allows you to deduct the medically necessary portion of care and services received. For example, if your doctor says you need help getting in and out of bed, mobility assistance would be deductible.
How do you deduct assisted living expenses?
Use IRS Schedule A (Form 1040) to deduct assisted living expenses. This form, Itemized Deductions, asks you to list deductible medical and dental expenses. Keep in mind that you can’t deduct these costs if you take the standard deduction on your tax return.
To claim the deduction, expenses in this category must exceed 7.5% of your adjusted gross income. If your AGI is $100,000, medical expenses become deductible once you spend more than $7,500 in this category. The IRS defines AGI as all sources of gross income, including capital gains, dividends and wages, minus specific adjustments.
What types of assisted living expenses are deductible?
Some tax-deductible assisted living expenses include fees you pay to healthcare providers, insurance premiums for long-term care, transportation for essential medical care, medical devices, and prescription drugs and medications. Fitness center fees at an assisted living center qualify for tax deduction when a doctor prescribes physical activity for a condition such as obesity.
Document these expenses carefully to have the necessary information to claim the available deductions at tax time. Ask the assisted living community for an itemized bill that distinguishes medical services from other types of care.