Torrance CA (April 2017) Tax season can be especially stressful for seniors on a fixed income and for family caregivers of elderly loved ones—groups that include millions of budget-conscious Americans looking to keep expenses down. For older adults living in an assisted living facility as well as for caregivers, tax deductions may be a possibility. Welbrook South Bay offers some important information regarding potential tax deductions*.
The good news is that seniors and caregivers may be eligible for tax deductions for medical and dental expenses. Another bright spot in 2017 is that final tax returns are due Tuesday, April 18, three days later than the standard April 15 date. This year the 15th falls on a weekend and Monday, April 17, is Emancipation Day, a federal holiday, giving tax filers until April 18 to complete their returns.
Seniors receiving medical care in assisted living may qualify for tax deductions. This includes residents with Alzheimer’s or other forms of dementia who require substantial supervision to protect their health and safety.
Taxpayers married to or related to seniors requiring care may be eligible for deductions if the senior qualifies as the taxpayer’s dependent according to IRS requirements. Detailed information on dependency can be found at http://www.irs.gov/publications/p554/ch05.html. Additionally, the caregiver must provide more than half of the support for the senior during the year.
Which Senior Living Expenses Can Be Deductible?
For certain assisted living expenses to be tax deductible, the resident must be considered “chronically ill.” A doctor or nurse needs to have certified that the resident either:
- Cannot perform at least two activities of daily living, such as eating, toileting, transferring, bath, dressing, or continence, or…
- Requires supervision due to a cognitive impairment (such as Alzheimer’s disease or another form of dementia).
To qualify for a deduction, the senior’s personal care services need to be provided according to a plan of care prescribed by a licensed health care provider. This means a doctor, nurse or social worker must prepare a plan that outlines the specific daily services the resident receives.
Typically, only the medical components of assisted living costs are deductible and ordinary living costs like room and board are not. But if the resident is chronically ill and the facility is acting primarily for medical care and the care is being performed according to a certified plan of care, then the room and board may be considered part of the medical care and the cost may be deductible.
Residents who are not chronically ill may still be able to deduct the portion of their expenses that are attributable to medical care, including entrance or initiation fees.
To claim the deduction, the medical expenses have to be more than 10 percent of the resident’s adjusted gross income. (For taxpayers 65 and older, this threshold will be 7.5 percent through 2016.) In addition, only medical expenses paid during the year can be deducted, regardless of when the services were provided, and medical expenses are not deductible if they are reimbursable by insurance.
For more information on what can and cannot be deducted for medical expenses see Publication 502 on the IRS Web site at http://www.irs.gov/pub/irs-pdf/p502.pdf
*Welbrook hopes this information is useful, it is not an expert in tax preparation, and strongly advises seeking the advice of a professional tax preparer or financial advisor for assistance.
To learn more about a healthy senior lifestyle contact Welbrook South Bay at 310-997-0838.
About Welbrook South Bay
Welbrook South Bay provides the finest in independent living, assisted living, and memory care options for residents. Located in Torrance, California, the expertly trained staff provides residents with the highest standards of senior care services. It is operated by Integral Senior Living, which manages independent, assisted living and memory care properties. ISL is founded on a care philosophy that fosters dignity and respect for residents and promotes their independence and individuality. For more information call 310-997-0838 or visit www.welbrooksouthbay.com.
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