deduction for Nursing and retirement homes that provide lifetime medical care

[tnefritt]

Hi,

My wife and I are retired, and my wife is in a nursing home. She is expected to be there for the rest of her life. I am paying 100% out of pocket for her stay there. Is any of this deductible? Would I deduct it in medical deduction?

[NCperson · Accepted solution]

it's a medical expense but note that only the portion that is above 7.5% of your adjusted gross income is deductible.  (turbo tax will work you through this)

[notsofasteddie]

What does it mean that " Turbo Tax will work you through it?"

[MarilynG1]

@notsofasteddie Click this link for more info on How to Enter Nursing Home Expenses.

If you are using Itemized Deductions, then Medical Expenses are deductible that exceed 7.5% of your AGI (Adjusted Gross Income).

Enter all your Deductions in TurboTax, and it will calculate which deduction is best for you, Itemized or Standard. 

Sometimes your state will give you a deduction for items you were not able to claim on your Federal return.  Watch for this as you go through your state interview.

This link has details on Itemized vs. Standard Deduction. 

[notsofasteddie]

So the allocation percentage, 40.42% for 2020, is applied by Turbo Tax!

[ToddL99]

Where did you see an allocation percentage of 40.42%?

[notsofasteddie]

My wife and I are living in a life care retirement community in Florida.  In late January, the CFO sent us a letter saying that the allocable percentage to the obligation to provide medical care would be 40.42%. Since it is a separate entry into Turbo Tax, I'm assuming that the program handles the appropriate calculation, but I am trying to confirm

[ToddL99]

TurboTax will not make that calculation - you will have to calculate the amount (40.42% X monthly fees X 12 = 2020 Medical Expense Deduction for your community's healthcare services).  

Make the entry in the Medical Expenses interview of Deductions and Credits. See Where do I enter my medical expenses? for instructions.

(The letter you received may have already made the calculation for you, based on your monthly fees).

[notsofasteddie]

Thanks for the update!

I guess contrary to a previous community response, "Turbo Tax won't take care of it!" It would have been nice to know.

I thought that since it had it's own entry category it would.  At least I know before I file.

[ThomasM125]

What you need to do is pretty straight forward. Just add up the cost from your monthly invoices and multiply the total by .4042, and that will give you the medical expense to enter in TurboTax. TurboTax will then calculate the allowed deduction based on your income and other deductions.

[notsofasteddie]

The calculation is easy after all I graduated 6th grade. The issue is that I have to make it.

I thought, as did others, that Turbo Tax would do it for me. I thought Turbo Tax would take care of it!!

[MarilynG1]

@notsofasteddie Not all nursing homes use 40% as the eligible amount for Medical Expenses, so TurboTax would have no way of knowing this.