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Does assisted living count as a medical expense?
Date Updated: July 26, 2024
Written by:
Tiffany Amber Stockton, an award-winning author and speaker, excels in crafting narratives on senior healthcare, with an expertise in memory care after helping her grandfather live with dementia. With twenty-six published books to her credit, she uniquely blends literary prowess with a compassionate understanding of the challenges faced by older adults. Follow her on LinkedIn for updates on her distinguished writing career in the realm of professional copywriting and copyediting.
Reviewed by:
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.
Assisted living counts as a medical expense for tax purposes, depending on circumstances and the nature of services provided. The Internal Revenue Service (IRS) allows the deduction of certain expenses if assisted living costs primarily cover medical care. If the individual requires assistance with activities of daily living (ADLs) due to chronic illness or severe cognitive impairment, those expenses also count for deductions.
Understanding IRS guidelines for medical expense deductions
Qualified expenses involve the diagnosis, cure, treatment or prevention of disease, and cost of treatment affecting decline in any function of the body. Deductible medical expenses cover a range of services. This includes payments to health care professionals, hospital stays, surgeries, prescription medications and transportation expenses related to medical care.
Eligible expenses must exceed a certain percentage of the taxpayer’s adjusted gross income (AGI) for deduction, currently set at 7.5%. Expenses must be from the same tax year as the deduction, including payments for services or products related to medical care. Taxpayers must maintain accurate and detailed records of medical expenses, such as receipts, invoices and statements. Remember, proper documentation supports deduction claims in case of an IRS audit. Consult with a tax professional or refer to the most recent IRS guidelines for up-to-date information relating to your situation.Potential complications of deducting assisted living medical expenses
The challenge of determining medical necessity lies in knowing the difference between general support and medical care services. Detailed records should outline the medical nature of each expense, which is why it’s so important to keep them. This includes receipts for medical services, prescriptions and a breakdown of costs associated explicitly with health care needs. Should a denial occur, you have the option to appeal and provide additional evidence of a medical need to claim expenses. Seek professional guidance to help you navigate this process smoothly.
State regulations also complicate the process. Some locations have additional criteria regarding the deductibility of assisted living expenses. Stay informed on the most recent laws to comply with federal and state regulations. In addition, strategic tax planning, such as timing your incurred expenses and maximizing deductions within allowable limits, can optimize deductions. Speak to tax attorneys or accountants specializing in senior care for instructions on the best course of action.