How to Deduct Assisted Living and Nursing Home Bills”
Watch your wallet: the median cost in 2018 for an assisted living facility was $48,000 and over $100,000 for nursing home care. If you could deduct these expenses, you’d substantially reduce your income tax liability—possibly down to $0—and dramatically reduce your financial burden from these costs. As you might expect, the rules are complicated as to when you can deduct these expenses. But I’m going to give you some tips to help you understand the rules. Medical Expenses in General On your IRS Form 1040, you can deduct expenses paid for the medical care of yourself, your spouse, and your dependents, but only to the extent the total expenses exceed 10 percent of your adjusted gross income. Medical care includes qualified long-term care services. Assisted living and nursing home expenses can be qualified long-term care expenses, depending on the health status of the person living in the facility. If you operate a business, with the right circumstances, your business could establish a medical plan strategy that could turn the medical expenses into business deductions. Qualified Long-Term Care Services
- The term “qualified long-term care services” means necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, and rehabilitative services, and maintenance or personal care services, which are required by a chronically ill individual, and are provided pursuant to a plan of care prescribed by a licensed health care practitioner.
- Hands-on assistance is the physical assistance of another person without which the individual would be unable to perform the activity of daily living.
- Standby assistance is the presence of another person within arm’s reach of the individual that’s necessary to prevent, by physical intervention, injury to the individual while the individual is performing the activity of daily living.
- Examples of standby assistance include being ready to catch the individual if the individual falls while getting into or out of the bathtub or shower as part of bathing, or remove food from the individual’s throat if the individual chokes while eating.
Want to know more? Have some tax questions of your own? Get in touch with us and we’ll guide you thru the tax and accounting process.