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Can Entrance Fees for Assisted Living Be Deducted on Taxes?
Date Updated: July 26, 2024
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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).