If you’re considering assisted living options or are currently a member of an assisted living community, you might be wondering “is assisted living tax-deductible?”. There are a few options that you or your loved ones can consider when it comes to offsetting costs with tax deductions for senior living.
While seeking consultation from a professional accountant or financial advisor is essential for figuring out what would work best for you and your financial situation, we hope this article will help you get a better high-level understanding of what is tax-deductible for assisted living.
Standard Deductions and Itemized Deductions for Seniors in Assisted Living
When filing your taxes, you may be eligible for a standard deduction or itemized deductions. A standard deduction is a fixed amount that you can deduct from your taxable income without having to itemize your deductions. For the 2022 tax year, the standard deductions include:
Married Filing Jointly or Qualifying Widow(er) – $25,900 (increase of $800)
Head of Household – $19,400 (increase of $600)
Single or Married Filing Separately – $12,950 (increase of $400)
Additional standard deduction amounts for taxpayers who are 65 and older or are blind:
Single or Head of Household – $1,750 (increase of $50)
Married taxpayers or Qualifying Widow(er) – $1,400 (increase of $50)
To help you determine whether standard deductions or itemized deductions would work best for you, first consider the total amount of your eligible tax deductions, including assisted living and medical expenses, and compare it to the standard deduction amount. If your eligible tax deductions exceed the standard deduction amount, you might find it more beneficial to itemize your deductions.
In most cases, standard deductions are the recommended option; however, we advise that you speak with a tax professional to fully understand which option would work best to meet your unique needs.
What Is Tax-deductible for Assisted Living?
One way that seniors can claim a tax deduction for assisted living expenses is through the medical expense deduction. This deduction allows you to deduct eligible medical expenses that exceed a certain percentage of your Adjusted Gross Income (AGI). For the 2022 tax year, the threshold for the medical expense deduction is 7.5% of AGI, meaning that you can only deduct medical expenses that exceed 7.5% of your AGI.
Assisted living expenses that may qualify for the medical expense deduction include:
Meals and lodging expenses, if they are provided as part of the assisted living services
Nursing and medical care services
Personal care services, such as assistance with bathing, dressing, and grooming
Therapy and rehabilitation services
Transportation to medical appointments
To be eligible for the medical expense deduction, you must have incurred the expenses primarily to alleviate or prevent a physical or mental disability or illness. It’s also important to note that the expenses must be considered reasonable and necessary based on your medical condition.
Non-Tax-Deductible Assisted Living
While some assisted living expenses may qualify for the medical expense deduction, not all assisted living expenses are tax-deductible. For example, personal and living expenses, such as the cost of clothes, haircuts and entertainment, are not tax-deductible. Additionally, dependent care expenses, such as the cost of hiring a caregiver for a dependent child, are not tax-deductible.
Exceptions and Special Circumstances
There are some exceptions and special circumstances that may allow you to claim a tax deduction for assisted living expenses. For example, caregivers who provide care for a dependent senior may be eligible for a tax credit. Additionally, if you have a spouse with Alzheimer's disease or another form of dementia, you may be able to claim a tax deduction for certain expenses related to their care.
How To Claim Tax Deductions for Assisted Living Expenses
To claim a tax deduction for assisted living expenses, you must document and keep records of all relevant expenses. We also highly recommend that you consult with a tax professional to determine your eligibility for the medical expense deduction and any other tax credits or deductions.
Assisted Living Options at The Grand Royale
While only certain aspects of assisted living may be tax-deductible, the care that assisted living communities provide greatly benefit seniors who need assistance with daily living activities. At The Grand Royale, we’re committed to providing you and your loved one with the ultimate peace of mind knowing that we offer the support needed for remaining as independent as possible with on-site healthcare services and convenient amenities and services.
Explore our Assisted Living options and discover how our amenities and services provide a worry-free lifestyle.