Nursing home costs are tax deductible if the primary reason for residence in a nursing home is to receive medical care. The following costs are tax deductible:
- Medical care
Note: If the primary reason for entering the nursing home isn't to obtain medical care, only the portion of the fees directly spent on medical treatment are deductible. Meals and lodging wouldn't be deductible.
Assisted living expenses are deductible when a doctor has certified a patient can't care for themselves. These individuals are unable to perform two or more activities of the following daily living activities:
- Managing incontinence
Assisted living expenses may also be deductible if an individual requires supervision due to a cognitive impairment, such as Alzheimer’s or another form of dementia.
To qualify for cost-of-living deductions there must be a plan of care prepared listing all of the services that the resident will receive to qualify for the deduction. The assisted living facility should provide residents with a statement showing what part of their fees is for medical costs.