Assisted Living Fee Deductibility

[rompnstompn]

So—I've asked this question before in online tax forums:  Are Mom's assisted living expenses tax deductible? 

I had to move her into assisted living this year because she became unable to manage daily responsibilities such as cooking/cleaning/medications, etc., and she becomes bedridden and in need of emergency hospitalization if left on her own.  With the provision of having others cooking and cleaning for her and administering her medications more properly for her, she has been thriving much better.  I'm certain that she'd have been deceased by now without that assistance, and I think every medical professional we've been involved with would wholeheartedly agree. ↓

The hasty answer I've received is "Well, of course those expenses are deductible!"  However, in reading further in TT topics and IRS pubs about what qualifies, the mere fact that she can no longer manage daily life/self-care on her own do not intrinsically qualify tax deductibility for the exorbitant cost of assisted living.  The pubs I've read all make it sound like she needs to be there by reason of a more specific kind of illness with a specific care plan for the expenses to qualify as tax deductible (as would be the case with admittance to a nursing home, which is quite different from mere assisted living).  New Mexico has a doctor-poor situation (with an alarming diaspora of doctors!), and we certainly have no deliberate care plan for her.  ↓

Contrary to the positive tone taken by those with a hasty affirmative, however, the pubs I've read seem to imply that Mom's situation is no more tax deductible than the cost of wiper blades or Taco Bell.  As she's spent almost $60K+ for this situation in the past ten months, I would of course very much prefer to be able to take advantage of any deductibility for those expenses—but don't want to go against the law (she's too old for prison!). 

So, what's the real scoop here—should I just forget about researching deductibility for her ALF's and take the standard deduction, or am I overlooking something important? 

[KeshaH]

Assisted living expenses can potentially qualify as medical expenses on your mom's tax return if they meet certain requirements. Medical expenses have to exceed 7.5% of her adjusted gross income and she has to itemize her deductions. 

Assisted living expenses related to long-term care can qualify as medical expenses. Qualified long-term care includes helping with "daily living activities" services such as bathing, eating, continence, getting dressed, etc. To be deductible, a medical professional will have needed to certify that your mother can't perform at least two of the daily living activities without assistance or needs substantial supervision due to severe cognitive impairment and the services have to be provided according to a prescribed plan of care. 

Given the significant cost of your mother staying in the assisted living facility, it's definitely worth looking into the services being provided to determine if they qualify for a medical expense deduction.

[rompnstompn]

Thanks, KeshaH!

Sorry for the incommunicado—I've been busy with other things lately and had to put this on the back burner for a while.

Up front, here's the question I feel the need for resolution of: Does such as a physician's observation (documented in her medical records) that Mom has some kind of "dementia" qualify her assisted living expenses for tax deductibility?  (But please read on for explanation of why my understanding is still muddled.)

It still sounds like Mom's tenure in assisted living doesn't quite meet the criteria for tax deductibility.  It sounds like tax deductibility is conferred more on "nursing home" situations, wherein the "patient" is under a doctor's prescribed, documented care or "long-term care plan."  (ALF's have things they call "care plans," but these seem to largely be of a corporate/legal "CYA" variety.) 

For example, Mom can dress herself.  She can still drive the car she still owns (although quite precarious!) The things she needs help with are such as meds administration (part of the reason for her deterioration is taking meds all-at-once, regardless of instructions [like with the need to take Levothyroxine on an empty stomach), cleaning (she doesn't have the energy to clean an apartment, clothes, kitchen, bathe herself, etc.) and managing her financial affairs.  Without help/prompts from others on these, she gets sick with UTI's, chemical imbalance and that sort of thing and becomes bedridden.  She seems to have a worsening problem with at least a mild cognitive impairment and serious short-term memory loss, along with some level of depression (the symptoms of which can mimic "dementia" in the elderly).  She is extremely forgetful and easily becomes lost/confused. 

New Mexico has a terrible problem with physician diaspora—it can take several months to get a hasty, 15-minute appointment with a primary care physician.  However, various physicians I've had to take her to over the past several years have all affirmed that "she should not still be living on her own."  There are notes about "cognitive impairment" or even "dementia" in medical records from various physicians, but none have really gone so far as to "prescribe" a regimen requiring placement in a nursing home.  (The one who declared some unspecified "dementia" possibly said this simply because she understood that this was necessary in order to have her placed in assisted living—i/o/w, it was simply a "rubric"-driven "diagnosis.")

Mom is presently in an assisted living facility, primarily because I don't have the wherewithal to physically manage her 24/7 to stave off medical emergency, rather than some doctor's prescription.  It's basically what can potentially be viewed by the tax authority as having been simply my choice, rather than medical necessity. 

It could take months to get a satisfactory answer from a physician.  Not having a clear answer yet, and with the April 15 deadline looming, what I will probably do is simply go ahead and file Mom's 2024 return without claiming ALF expenses and continue further research into this.  Best case scenario is that I may find that her 2024 ALF expenses actually were tax-deductible, whereupon I would be able to file an amended return.

Opinion(s)?

Danny

[DianeW777]

Here is the answer to your question. It is somewhat challenging to arrive at the correct amount allowed.

• Does such as a physician's observation (documented in her medical records) that Mom has some kind of "dementia" qualify her assisted living expenses for tax deductibility? 
  • Yes. Based on the key elements she must have assistance with and for her livelihood and good health she must have this assistance.
    • The things she needs help with are such as meds administration (part of the reason for her deterioration is taking meds all-at-once, regardless of instructions [like with the need to take Levothyroxine on an empty stomach), cleaning (she doesn't have the energy to clean an apartment, clothes, kitchen, bathe herself, etc.) and managing her financial affairs.  Without help/prompts from others on these, she gets sick with UTI's, chemical imbalance and that sort of thing and becomes bedridden.  She seems to have a worsening problem with at least a mild cognitive impairment and serious short-term memory loss, along with some level of depression (the symptoms of which can mimic "dementia" in the elderly).  She is extremely forgetful and easily becomes lost/confused. 
  • You have the documentation from doctors who have confirmed she should not be living alone. The diagnosis of dementia alone shows the need for care.

Part of your concern and your requirement is to determine the amount of the cost that is actually for medical care and nursing assistance. The condition will worsen with care and drastically without. 

• You can include in medical expenses the cost of medical care in a nursing home, home for the aged, or similar institution, for yourself, your spouse, or your dependents. This includes the cost of meals and lodging in the home if a principal reason for being there is to get medical care.  IRS Publication 502

If you take reasonable steps to determine the cost of the care, and keep those records. Start by requesting a breakdown from the assisted living facility.

@rompnstompn 

[dstover]

IRS publication 502 says this: "You can include in medical expenses the cost of medical care in a nursing home, home for the aged, or similar institution, for yourself, your spouse, or your dependents. This includes the cost of meals and lodging in the home if a principal reason for being there is to get medical care. Don't include the cost of meals and lodging if the reason for being in the home is personal. You can, however, include in medical expenses the part of the cost that is for medical or nursing care." https://www.irs.gov/pub/irs-pdf/p502.pdf

However, as pointed out above, you can only deduct unreimbursed medical expenses that exceed 7.5% of your adjusted gross income (AGI), found on line 11 of your 2024 Form 1040. And you might be better off with the standard deduction, depending on what other deductions you have.