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Are nursing home and assisted living costs tax deductible?

by TurboTax Updated 5 months ago

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
  • Meals
  • Lodging

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: 

  • Eating
  • Toileting
  • Transferring
  • Bathing
  • Dressing
  • 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. 

Your qualified long-term care insurance  premium payments are deductible if they're itemized on your 2023 federal taxes, but are subject to limitations based on the policy holder’s age:

  • Age 40 or under: $480
  • Age 41 to 50: $890
  • Age 51 to 60: $1,790
  • Age 61 to 70: $4,770
  • Age 71 and over: $5,960

To qualify, your long-term care insurance policy must:

  • Be guaranteed renewable
  • Have no cash surrender value
  • Not cover Medicare-reimbursed expenses
  • Not use any refund to reduce future premiums (except in death or cancelation)

To claim a family member who resides in a nursing home or assisted living facility as a dependent, you must meet all of these requirements:

  • The resident of the nursing home or assisted living facility must have gross income less than $4,700.
  • You provided more than half of the family member’s support for the year, (Note: Insurance and government payments to the facility on their behalf must be factored into the 50% of support calculation).
  • The family member must be a US citizen, or legal resident of Canada or Mexico.

For 2023, costs exceeding 7.5% of adjusted gross income (AGI) are deductible if they're itemized.

If you aren’t paying at least 50% of the resident’s support, you can join with other family members to create a mutual support group. 

 The mutual support group must meet the following requirements:

  • Each member of the mutual support group must contribute at least 10% of the cost of care.
  • Together, the group must contribute more than half of the resident’s support (No single person can have paid more than 50% of the person's support).
  • Each member of the support group must sign a Multiple Support Declaration and file Form 2120.

You and the other members of the mutual support group can take turns claiming the resident as a dependent on their tax returns in different tax years.

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