![]() citizen or legal resident or resident of Canada or Mexico, and Under limited circumstances, adult children may get a tax deduction if their parents or other immediate family members (including in-laws) live at an assisted living facility and qualify as their dependents. The assisted living facility is responsible for providing residents with information as to what portion of fees is attributable to medical costs. Residents who are not chronically ill may still deduct the portion of their expenses that are attributable to medical care, including entrance or initiation fees. In any case, the expenses are not deductible if they are reimbursed by insurance or any other programs. If the care is considered custodial and not medical care, the costs are deductible only to a limited extent. The rule states that for a chronically ill resident who is in the facility primarily for medical care and the care is being performed according to a certified care plan, then the room and board may be considered part of the medical care and the cost may be deductible, just as it would be in a hospital. ![]() When the resident is chronically ill, some or all of the cost for room and board may be deductible. ![]() But don’t presume that your deduction is limited to only the medical component stated in that letter! In fact, facilities provide a letter to residents that explain how the monthly payments are allocated between these types of expenses, and what should be deducted. Generally, only the medical component of assisted living costs is deductible, and you cannot deduct ordinary living costs like room and board. What part of the Assisted Living payment is deductible? Though not required by law, most assisted living facilities prepare care plans for their residents. This means a doctor, nurse, or social worker must prepare a plan that outlines the specific daily services the resident will receive. In addition, to qualify for the deduction, personal care services must be provided according to a plan of care prescribed by a licensed health care provider. requires supervision due to a cognitive impairment (such as Alzheimer’s disease or another form of dementia).cannot perform at least two activities of daily living, such as eating, toileting, transferring, bath, dressing, or continence or.In order for assisted living expenses to be tax deductible, the resident must be considered “chronically ill.” This means a doctor or nurse has certified that the resident either: In some cases, even the room and board is deductible, as described below. Don’t presume that the tax deduction is only limited to a portion of the cost the assisted living says is allocated to care. Many people do not understand these rules, and they pay more income taxes than the law requires. (For taxpayers 65 and older, this threshold is 7.5 percent through 2016.) You probably know that medical expenses, including some long-term care expenses, are deductible if the expenses are more than 10 percent of your adjusted gross income. You may be able to deduct a portion…or even all…of what you or a family members pays for assisted living costs.
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