Anyone taking memory care expense as a medical tax deduction?

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I know there has been a lot of back and forth with the new tax bill as far as eliminating deductions but as I understand the medical deduction is still available in the new signed tax bill. As I understand it the entire cost of memory care can be used as a medical deduction because cognitive impairment is counted as a medical condition.


I was wondering if anyone has successfully deducted the cost of memory care. My parents are self paying memory care and part of their savings are in the form of IRA and bonds that would generate a tax when cashed in....so it would help if i had this deduction.


Found below in research.. also had a handout from my memory care about looking into this tax deduction.


Because eligibility for the medical expense deduction should not be diagnosis driven, the provision requires the cognitive impairment must be severe. Severe cognitive impairment means a deterioration or loss in intellectual capacity measured by clinical evidence and tests. These tests should reliably measure impairment in short or long term memory; orientation to people, place and/or time; and deductive or abstract reasoning. In addition, it is intended that such deterioration or loss place the individual in jeopardy of harming self or others and, therefore, require substantial supervision by another individual.
In the past, amounts paid to nursing homes qualified as medical expenses only if medical care was the principle reason for the stay, or if not the principle reason, only that part of the cost of care attributable to medical care qualified (not meals and lodging) (Reg.1.213-1(e)(1)(v). The enactment of Internal Revenue Code Sec. 213(d)(1) included qualified long-term care within the definition of “medical care”. This means that amounts paid to nursing homes as well as other long-term care facilities and assisted living facilities can qualify as medical expenses. Provided the person meets either the activities of daily living (ADL) or cognitive impairment requirements and the costs are pursuant to a plan of care prescribed by a health care practitioner, the amounts paid will qualify as medical expenses.

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I'm a tax preparer and have many clients that we do their aging parents tax returns as well. If it is a condition they have that needs memory care -- we take it as part of their itemized deductions. If they're just staying at an independent living facility for companionship and convenience, we don't take the full cost, we take the medical portion. Obviously it's a case-by-case basis and depends on who prepares your taxes.
Thanks for the answer Thay90!

My parents are in memory care because of there lack of cognitive abilities. Do you have any suggestions of what tax pros I should look for who could handle this? (I live in the Dallas area in Texas. Last year I didn't itemize their taxes and just went to H&R block...

What supporting documents are required to take this deduction?

katiekay -- For 2017 their medical expenses would have to exceed 7.5% of their adjusted gross income, plus then any of those expenses over the 7.5% would have to exceed their standard deduction (for married filing joint their standard deduction would be $12,700) when added together with local taxes, charity, etc.

Different tax preparers may ask for different documentation. I know some of our clients actually have statements from their facilities that itemized out what is "room and board" and what is "medical" -- though it sounds like in your case it may all be considered medical. I don't know any Dallas area preparers, but I would suggest looking for a CPA firm or an EA. H&R Blocks are really hit and miss on if they have properly trained people.
My Dad used a CPA for his income taxes, and certain things were allowed to be deducted and other things were not... as thay90 had mentioned it is a case by case basis. This definitely wasn't a DIY situation, way too complex :P


"For 2017 their medical expenses would have to exceed 7.5% of their adjusted gross income"

Not according to this:

"If you itemize your deductions on Form 1040, Schedule A, the threshold for unreimbursed medical and dental expenses you paid for yourself, your spouse, and your dependents must exceed 10 percent of your adjusted gross income before a deduction is permitted.
Most people who itemize their deductions can claim deductions for unreimbursed medical expenses, those which are not covered by health insurance, that exceed 10 percent of their adjusted gross income.
Temporary exemption for taxpayers age 65 and older
There is a temporary exemption for individuals age 65 and older until Dec. 31, 2016. If you are 65 years or older, you may continue to deduct total medical expenses that exceed 7.5 percent of your adjusted gross income through tax year 2016. If you are married and only one of you is age 65 or older, you may still deduct total medical expenses that exceed 7.5 percent of your adjusted gross income.
This exemption is temporary. Beginning Jan. 1, 2017, the 10 percent threshold will apply to all taxpayers, including those over 65."

https://www.irs.gov/individuals/changes-to-itemized-deduction-for-medical-expenses
Fortunately (or unfortunately) for me ... the cost of memory care for my parents will exceed both 7.5 and 10 percent.. of their adjusted gross income. (since with cognitive decline you can deduct the entire amount of memory care).

I guess we are lucky the medical deduction even still exists for those with very high out of pocket expenses... but it would have been nice to keep in at 7.5 for the current year at least.

Thanks everyone for your input on this.
Katiekay, it is my understanding that the 10% exclusion has been rolled back to 7.5% in the new tax bill. This change applies to 2017 and 2018, however in 2018 the standard deduction is about double, so many people may no longer itemize. You will probably still itemize in 2018 if the cost of memory care is anything like most. My mom's cost was $5,400 per month, so twelve months of that was almost $65,000. Added to the cost of health insurance, copays, dental care, glasses, hearing aids, pharmacy, etc., even with an income of $100,000 per year and the resulting exclusion of the first $7,500 of expenses, you will definitely be better off if you itemize. My mom's deductible expenses exceeded her income for the last several years of her life, so she paid no income tax.
Yes, it was set to go back to 10% for seniors, but the new bill has it at 7.5% for everyone for 2017 retroactively and 2018. First and possibly last time I'll ever get to use medical and itemize for myself!
The business office may have a document upon request that lists the % of the monthly rent that would be deductible. Don't forget insurance premiums and co pay
Thanks for clarifying, thay90. So they kept it at 7.5% for those over 65 for 2017 (after raising it to 10% for everyone else) until January 1, 2017. And now the new tax law has lowered the threshold for everyone to 7.5% retroactively to January 1, 2017. Confusing!

(We have an accountant do our taxes, as we have a small business.)

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