Tax Deductions for Assisted Living Facility Costs

Some medical expense for assisted living facilities are deductible if the expenses exceed 7.5% of the taxpayer’s adjusted gross income. Additionally, the resident must be “chronically ill” (as certified by a doctor or nurse), and the facility must provide personal care services according to a care plan stipulated by a licensed health care provider.

If the above requirements are met, then the living costs (e.g. room and board) associated with assisted living facilities may be deductible. Limited deductions are also available for residents living in facilities for custodial care. For residents who are not chronically ill, deductions are available for expenses attributable to medical care.

Adult children of residents may also receive tax deductions if the resident qualifies as a dependent. The adult child must provide over half of the resident’s yearly support and be a U.S. citizen, legal resident, or resident of Canada or Mexico. If the adult child contributes to the resident’s support under a “multiple support agreement,” but does not pay for over half of the resident’s support, he or she may still be eligible for a tax deduction.

See Tax Deductions for Assisted Living Costs, Elder Law Answers, 2011.

Special thanks to Jim Hillhouse (WealthCounsel) for bringing this article to my attention