The cost of assisted living services are often deductible on Federal income tax returns when a resident lives in an assisted living or a family member paying for assisted living services.
As the population steadily ages and the life span increases, assisted living care has become more common. It may be possible to deduct the cost of assisted care living depending on the type of services the recipient receives and the nature of the disability. The IRS has certain guidelines to determine eligibility.
A resident or family member may be allowed to deduct the cost of housing and meals when a person is in an assisted living community due to aging or the inability to care for oneself. Certain personal care services may also be deductible and the determining factor is generally the inability to perform at least two activities of daily living without assistance. These daily functions include such activities as eating, toileting, transferring, medication assistance, dressing, and bathing. A physician must certify in writing that the patient has been unable to perform these activities for at least 90 days.
If you are paying for a resident to be in an assisted living care facility for the reasons above, you may be eligible for a deduction on your itemized tax return. The resident must qualify by criteria and must be related to the payer or have lived as a member of their household for an entire year. A parent must also be a citizen or resident of the United States, Mexico or Canada, and the child must have paid over 50% of their support for the year.
The deduction may also be taken in the case of certain cognitive diseases such as Alzheimer’s disease or Dementia related diagnosis. Although many residents may not qualify under the “inability to perform to basic life activities” rule, they often require a substantial amount of care, oversight and guidance in order to insure their safety.
As the “baby boomer” generation continues to age, the need for assisted living care will continue to increase. Tax deductions for this care help to offset the cost and the financial burden on both the residents and family members responsible for their care.
It’s important to consult with your tax professional to determine your eligibility for this deduction.