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Can Entrance Fees for Assisted Living Be Deducted on Taxes?

Date Updated: July 26, 2024

Written by:

Andrea Miller

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.

Reviewed by:

Rachel Rose

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.

Entrance fees for assisted living can’t be deducted from taxes. However, the IRS allows you to deduct a portion of assisted living entrance fees if they cover a medically necessary service. These costs also have to meet other requirements to qualify for deduction.

What are the IRS rules for deductingassisted living entrance fees?

IRS rules let you deduct eligible medical and dental expenses within assisted living entrance fees. For example, if your community includes a medical evaluation and care plan as part of the entrance fees, those costs qualify for deduction.

Taxpayers must itemize their deductions to subtract medical expenses. If you take the standard deduction, you don’t qualify.

Finally, medical expenses become deductible only when they exceed 7.5% of your adjusted gross income. If your AGI for the year is $50,000, medical expenses above $3,750 qualify.

How does the IRS define medical expenses?

The IRS defines deductible medical expenses as costs associated with services to diagnose, treat, control or prevent acute or chronic illness or injury. It doesn’t include general wellness items, such as nutritional supplements. To claim the deduction, you must show that a licensed physician, therapist or advanced practice nurse provided or prescribed the service.

How do you deduct assisted living entrance fees?

To deduct assisted living entrance fees, ask the facility for a letter itemizing the medical portions of the fee. Submit this document to the IRS along with Schedule A of Form 1040 (Itemized Deductions).

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Caring.com

Caring.com is a leading online destination for caregivers seeking information and support as they care for aging parents, spouses, and other loved ones. We offer thousands of original articles, helpful tools, advice from more than 50 leading experts, a community of caregivers, and a comprehensive directory of caregiving services.

 

The material on this site is for informational purposes only and is not a substitute for legal, financial, professional, or medical advice or diagnosis or treatment. By using our website, you agree to the Terms of Use and Privacy Policy

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