My mother is in an assisted living facility. Under the Healthcare Portability and Accountability Act of 1996 can she deduct her monthly living expenses?

[TomD8]

The answer is, "It depends."  For a more detailed explanation, see this web article:

https://www.elderlawanswers.com/tax-deductions-for-assisted-living-costs-7184

[rjs]

I see two incorrect statements in the article that TomD8 referenced.

"Medical expenses are deductible if the expenses are more than 7.5 percent of your adjusted gross income."

If someone's medical expenses are more than 7.5% of her Adjusted Gross Income (AGI) she can claim an itemized deduction for the amount that is over 7.5% of her AGI, not for all of the medical expenses. For example, if her AGI is $60,000, 7.5% of that is $4,500. If she has $10,000 of unreimbursed medical expenses, she can claim an itemized deduction of $5,500 ($10,000 - $4,500). Only medical expenses that she pays herself, that are not paid or reimbursed by insurance, can be used to calculate the deduction. Furthermore, medical expenses are an itemized deduction. They will not reduce her tax or increase her refund unless her total itemized deductions are more than her standard deduction.

"In some circumstances, adult children may also get a tax deduction if their parents, in-laws, or other immediate family members: Live at an assisted living facility . . ."

There is no tax deduction for having a family member living in an assisted living facility. You might be able to claim your mother as a dependent on your tax return if she meets all the requirements to be your dependent. Living in an assisted living facility is not one of the requirements to be claimed as a dependent. Claiming someone as a dependent is not a tax deduction. If you claim someone other than your child as a dependent, you might get a tax credit (not a deduction) of up to $500. There are other requirements for the credit besides claiming the person as a dependent. If you can claim your mother as a dependent, whether or not you actually do claim her, she has to check the box on her tax return that indicates that someone can claim her as a dependent.

Claiming a deduction for medical expenses, and claiming someone as a dependent, are provisions of the tax law (the Internal Revenue Code). The Health Insurance Portability and Accountability Act (HIPAA) has nothing to do with these tax provisions.

[Bsch4477]

@rjs You make excellent points. I would only add:  

You can include medical expenses you paid for an individual that would have been your dependent except that: The person received gross income of $4,700 or more in 2023; The person filed a joint return for 2023; or. You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2023 return.

[NCperson]

@rjson the 2nd comment, it states the adult child may be eligible for a tax DEDUCTION; it never states a tax CREDIT.  While vaguely written, if the assisted living parent can be claimed as a dependent of their adult child's tax return, that adult child can deduct all those medical expenses (subject to the 7.5% limit). I suspect that is what it means, but could have been written more clearly.  

[rjs]

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@NCperson wrote:

if the assisted living parent can be claimed as a dependent of their adult child's tax return, that adult child can deduct all those medical expenses (subject to the 7.5% limit).

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The child can deduct medical expenses that the child paid for a parent who is the child's dependent. The child cannot deduct medical expenses that were paid by the parent, even if the parent is a dependent of the child. See "Whose Medical Expenses Can You Include?" in Pub. 502.

Also note that if the child claims a deduction for medical expenses that the child paid for a dependent parent, the expenses for the parent will be included in the total medical expenses on the child's tax return. That total will be reduced by 7.5% of the child's AGI. The dependent parent's AGI is not used in calculating the deduction on the child's tax return.

[NCperson]

@rjs agreed