Question on tax deduction for Assisted Living Care. It is a private pay facility, only her meds and if needed, therapy is paid for by an insurance she has.
This can be a complicated issue, but I rely on the following information that is on the irs.gov website:
First of all, will she (I am assuming you are taking about your mother) be paying her own expenses? If so, the medical expenses are deductible on her tax return. If her income is low enough, and you are paying her medical expenses, she may qualify as your dependent, and then the expenses could be included with your tax return. Information about determining if she is your dependent is on the website.
The next step is to determine which expenses are deductible. This information can be found in Publication 502. Medical and dental expenses, eyeglasses, hearing aids, etc. that are not paid by insurance qualify. Also, insurance premiums including Medicare Parts B and D. Qualified long-term care services are deductible for a chronically ill individual. A licensed health care practitioner must certify that the individual either (1) Is unable to perform at least two activities of daily living without substantial assistance or (2) Requires substantial supervision to be protected from threats to health and safety due to severe cognitive impairment. If the individual qualifies under either of these categories, then maintenance and personal care services are a qualified deduction. "Maintenance or personal care services is care which has as its primary purpose the providing of a chronically ill individual with needed assistance with his or her disabilities (including protection from threats to health and safety due to severe cognitive impairment)."
Information I have from another source states that the care facility must have a licensed care provider on staff who creates and updates a care plan for the individual.
So, the answer to your question depends on why the individual is living in an AL facility. My accountant advised me that a statement from the doctor stating that due to cognitive impairment the individual could not safely live independently would make the monthly fees deductible. Fees for extras such as beauty shop services are not deductible.
Also, the 7.5% of adjusted gross income exclusion has been raised to 10% for 2013 and later years, EXCEPT for those over age 65. The 7.5% remains in place through 2016 for them.
You need a letter from your doctor stating that she need to be in an Assisted Living facility. There must be at least 2 reasons off a list of about 10 possible reasons, such as incontinence, and lack of mobility. Then you need to get the assisted living facility to tell you the portion of her rent that is going for medical care. I'm sure they know the answer, it's a common question.
I was just chasing a coyote out of my yard, it doubled back and came back into the yard looking for my cat and dog. Those are learning moments and they don't pay any rent!
Ferris is right: get the precise answer from the right source. The details matter. (For example, on mortgages, you deduct ONLY the interest; on medical expenses, you deduct ONLY "qualified" ones and ONLY if their total is more than 7.5% of your Adjusted Gross Income.) So what you're asking is whether the fee at the ALF is a qualified medical expense. If it's really "rent" then that's not a medical expense at all. But it could be seen as the cost of a qualified long-term care service. In publication 902, click on "Long Term Care" for the definition of that. And you can call the IRS's 800-number to check your understanding.
I have never heard of getting any tax deduction on rent. Mortgage yes. Call the IRS and ask or download your question. I don't think any of us work for the IRS and are really unqualified to answer...
You can only deduct medical expenses for Federal Tax purposes. You may claim the rent on your state tax return. It depends on each state if it has a rental deduction. There has to be a rental agreement in place with the Assisted Care Facility to qualify for the rental deduction. Your best bet would to seek a tax preparer or your state internal revenue website.
First of all, will she (I am assuming you are taking about your mother) be paying her own expenses? If so, the medical expenses are deductible on her tax return. If her income is low enough, and you are paying her medical expenses, she may qualify as your dependent, and then the expenses could be included with your tax return. Information about determining if she is your dependent is on the website.
The next step is to determine which expenses are deductible. This information can be found in Publication 502. Medical and dental expenses, eyeglasses, hearing aids, etc. that are not paid by insurance qualify. Also, insurance premiums including Medicare Parts B and D. Qualified long-term care services are deductible for a chronically ill individual. A licensed health care practitioner must certify that the individual either (1) Is unable to perform at least two activities of daily living without substantial assistance or (2) Requires substantial supervision to be protected from threats to health and safety due to severe cognitive impairment. If the individual qualifies under either of these categories, then maintenance and personal care services are a qualified deduction. "Maintenance or personal care services is care which has as its primary purpose the providing of a chronically ill individual with needed assistance with his or her disabilities (including protection from threats to health and safety due to severe cognitive impairment)."
Information I have from another source states that the care facility must have a licensed care provider on staff who creates and updates a care plan for the individual.
So, the answer to your question depends on why the individual is living in an AL facility. My accountant advised me that a statement from the doctor stating that due to cognitive impairment the individual could not safely live independently would make the monthly fees deductible. Fees for extras such as beauty shop services are not deductible.
Also, the 7.5% of adjusted gross income exclusion has been raised to 10% for 2013 and later years, EXCEPT for those over age 65. The 7.5% remains in place through 2016 for them.
It's confusing though. I'd contact an accountant.