Is Assisted Living Tax Deductible?

As an assisted living community in Camden County, NJ, our team often gets asked about the cost of assisted living. With the cost of senior care services on the rise, it’s more important than ever that families know what financial options are available to ensure their loved one gets the best possible care, affordably. One way to help achieve this is through tax deductions for assisted living.

In fact, you may be able to deduct a portion of what you pay for assisted living costs. Medical expenses (including some long-term care expenses) are deductible if they exceed 10% of your gross income in 2019.

What Are the Qualifying Criteria for Assisted Living Tax Deductions? 

In order for assisted living expenses to be tax deductible, the resident has to be considered “chronically ill.” This means that they cannot perform two or more activities of daily living (eating, toileting, transportation, bathing and dressing, etc.) or they require supervision due to a cognitive impairment (such as Alzheimer’s disease, dementia or outcome of traumatic brain injury, etc.).

Assisted living services also have to be provided according to a plan of care prescribed by a licensed healthcare provider. This requires a doctor, nurse or social worker to prepare a plan outlining the specific services your loved one needs. Often, this can be done through the assisted living community itself.

While tax deductions usually apply to the assisted living services themselves and not room and board, these can also be included if it is part of the care plan. This often applies to chronically ill residents and residents who are there for medical care.

In the event that your loved one is not a chronically ill resident, they may still deduct a portion of their expenses not related to medical care, such as initiation fees or entrance fees.

If you are an adult child paying for your parent’s assisted living, you are also able to deduct these expenses providing that they meet the criteria above and that you cover more than half of these expenses in the applicable tax year. If you cover between 10 and 50% of these expenses, you can still qualify for a deduction if you contribute according to a Multiple Support Agreement.

This agreement must be signed between all contributing family members and the total contribution must be for more than 50% of your loved one’s expenses. In these agreements, each person will qualify for the deduction.

 

Visit Our Assisted Living Community in Camden County, NJ and Experience True Independent Living for Seniors 

Collingswood is part of the United Methodist Communities network of high-quality, non-profit assisted living communities specializing in independent living for seniors. With an experienced care and assistance team, scalable services customized to each resident’s needs, and a lively social calendar, we focus our community to provide essential resources that promote independence and quality of life.

To find out more about United Methodist Communities or our assisted living community in Camden County, NJ, please visit our website at http://collingswood.umcommunities.org/ or contact us and book your visit today.