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Understanding Assisted Living Tax Deductions

With tax season right around the corner, everyone’s surely thinking about what expenses they’ll be able to write off this year—student loans, mortgage interest, 401(k) contributions…the list goes on.  Yet did you know that many residents of assisted living communities, Kingsway Manor included, qualify for assisted living tax deductions?  It’s true: “long-term care services” may fall under the category of unreimbursed medical expense on the Schedule A IRS form.  Wondering if you or someone you love qualifies?  Here are some things to know about the assisted living deduction before April 18.

 

  • The term “long-term care services” includes daily “personal care services” that are provided to residents of assisted living homes, including help with bathing, dressing, continence care, eating and transferring, in addition to “maintenance services,” including meal prep and household cleaning. So, if you or a loved one receive those type of services, you could qualify for the unreimbursed medical expense deduction.
  • In order to qualify for the deduction, an assisted living resident must be “chronically ill,” a term that refers to seniors who cannot perform two or more “activities of daily living,” such as those “personal care services” mentioned in the previous bullet. “Chronically ill” can also be used to describe someone in need of constant supervision because of “severe cognitive impairment,” like Alzheimer’s.  Qualifying assisted living residents must be certified “chronically ill” by a licensed health care practitioner in the previous 12 months.
  • The aforementioned “personal care services” must be provided in accordance with a care plan, which is developed upon admission to Kingsway Manor and reviewed at least every six months.
  • In order to take advantage of these deductions, an assisted living resident’s unreimbursed medical expenses must be at least 7.5 percent of his or her adjusted gross income. Sometimes children of assisted living residents can qualify for a deduction, if he or she provides more than half of the parent’s support costs.
  • It’s important to note that services provided at Kingsway Manor or other assisted living communities often extend beyond personal care services, and therefore cannot be deducted. Kingsway’s director of finance determines what percentage of the services provided in a given calendar year were medical care—say, 60%—and it is that amount that may be deductible, not the entire monthly fee.

Note: Kingsway Community is unable to advise residents on tax matters, so consult your tax accountant for more specific information regarding the assisted living deduction.  He or she will also be able to provide more info on deductions for residents of nursing homes, including Kingsway Arms Nursing and Rehabilitation Center.