If you or a loved one paid for senior living or long-term care this year, you may be wondering whether those expenses can provide a tax benefit. The answer is often yes, but it depends on the type of care being provided and the reason for the care.
When an individual lives in a nursing home or other senior living or long-term care facility primarily to receive medical care, the costs may qualify as deductible medical expenses. In some cases, this can include the cost of meals and lodging provided by the facility.
But what about custodial care? Custodial care is assistance with everyday activities such as bathing, dressing, eating, getting in and out of bed, or taking medications. This type of care is common in senior living and long-term care settings and is focused on helping someone with daily living rather than providing skilled medical treatment.
If a person is in a facility primarily to receive custodial care, the entire cost generally isn’t deductible as a medical expense. However, the portion of the cost related to qualified medical or nursing care may still be deductible.
There is another important piece to keep in mind: qualifying medical expenses are deductible on Schedule A only if you itemize, and only the portion of your total qualifying medical expenses that exceeds 7.5% of your adjusted gross income (AGI) is deductible.
If you or a family member is paying for senior living or long-term care, keep those monthly statements and any documentation from the facility. At N&Co, we can help you determine which expenses may qualify, make sure you’re taking advantage of the deductions available to you, and consider how those expenses fit into your overall tax situation. When significant care costs are involved, having the right guidance can help make tax time a little #LessTaxing.