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Mom has social security ($1000) and a pension ($700) and dividend income and capitol gains and withdrawal from IRA, all of which are taxable incomes. Is the full fee for assisted living plus the homecare agency at the AL plus the outside companions deductable as a medical expense? (Yes I have an accountant, and his position has been that yes it is, which seems almost too good to be true). Has anyone other experience with this? Or other information? I have searched online and read what I can, and I also use turbotax to do a draft each year before I send to the accountant, but I still feel that we may be audited in the future. Some of the expense in the AL is for housing rent and for food and utilities, it seems to me. Is that 'medical' because she needs to be there?

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Kathy, there are a lot of hoops to jump through regarding IRS and what is allowed to be deducted and what isn't according to my Dad's CPA.

Example, last year my Dad had caregivers in his home to help him because he was a fall risk and had major issues going up and down the stairs at his house. So, the CPA was able to deduct those costs. Plus deduct my late Mom's long-term-care, and deduct her brand new hearing aide.

But when 2017 rolls around to do the 2016 income taxes it a whole new ballgame as my Dad recently moved into Independent Living, and that is not deductible. The CPA will look next year to see if Dad could deduct the "extras" such as daily pill management.

Found out that my Mom over the past couple of years could have checked the box as being legally blind having serious macular degeneration. The CPA never knew this until he saw I had checked the box for being blind, and of course my Mom didn't want anyone know she was getting older... [sigh].
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Don't forget you can't deduct all of the qualified expenses, but only the portion that exceeds either 7.5% or 10% of gross income, depending on the age of your mother:

"AGI threshold. You include all the qualified medical costs that you paid for during the year. However, you can only deduct the amount that is more than 10 percent of your adjusted gross income.


•Temporary threshold for age 65. If you or your spouse is age 65 or older, the AGI threshold is 7.5 percent of your AGI. This exception applies through Dec. 31, 2016."

https://www.irs.gov/uac/Claiming-a-Tax-Deduction-for-Medical-and-Dental-Expenses
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Kathy, I sincerely doubt the physician would put him/herself in the position of either suggesting, recommending, or stating which items would be considered deductible. Nor should he or she. That's a tax issue and conclusion, not a medical one.

If you don't have Publication 502 and can't get it from a library, either ask your accountant for a copy or order it directly from the IRS. It will provide more detail and guidance on determining deductible items.

NYDIL is right, especially about the 100% defensible position.
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Your accountant sounds too aggressive for my comfort. Our accountant is comfortable deducting about one-third of the expenses. You have to be able to defend your position and 100% is not defensible.
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I does remind me that the power of a doctor's signature is still pretty big.
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I suspect I need to draft some type of 'letter' for the MD to sign listing specific services I want to deduct. So perhaps the base rent which includes room, food, and onsite activity can be included if I write "patient requires residence with 24/7 assistance available for emergencies, bathing and clothing, falls, reminders for meals, and medications including prn" and have that signed. I probably should not try to write off the companions who interact with her and take her to hairdressers or medical appointments because she can't drive and because she needs those for her mental health therapy (no kidding, they work better than meds with fewer side effects and she has a true psych dx). Maybe I should stick with trying to get everything that happens at the AL appear as a medical deduction somehow. The accountant says 'the government has bigger fish to fry than to audit your mother'. 'Just get a doctor's note that all of it was necessary as part of her treatment plan'. Maybe I could get her psychiatrist to sign the one for the outside companion agency, and her internist to sign for the AL?
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My accountant told me that if the patient needs help with dressing him or herself needs to have medications managed or other help then this qualifies as a medical deduction. (meaning the help within the nursing home) BUT this is how the deduction is calculated. Take 7.5% of her adjusted gross income and anything above that figure qualifies as a deduction.
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We were told only the "level of care" was deductible, not the base rent, food or utilities, UNLESS there is an MD order stating 24/7 care was necessary.
Companions NO, but aides that provide a service as ordered by the MD, yes.
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