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Tax Deductions for Senior Healthcare


Sally’s son had no idea that he had write-offs  until he asked his CPA.  It was a relief to finally get some reward for the thousands of dollars he was paying for her care.


Tax Season

The Center for Disease Control’s National Study of Long-Care Providers report that 700,000 live in more than 22,000 assisted living communities with the median price of a one bedroom being $3,500.  To most paying via private funds this is NOT pocket change, but a major item in their budget!

Tax deductions may only be used by the senior or the person preparing the forms.  The qualifying costs must meet the following requirements:

  • The outlay for room and board are generally not part of the equation.
  • The senior must be a U.S., Canada, or Mexico citizen,
  • If you are filling out the forms and are not a resident, you must determine if the resident qualifies a dependent for you.
  • The deduction may not exceed a percentage or your adjusted gross income. This rate changes per the IRS, check the Publication 502 for the latest amount.
  • The resident must be engaged in the care itemized on the ‘plan of care’ determined by one of the nurses, or a physician.
  • The same licensed care provider(s) must have declared the loved one as “chronically ill.” The involves determining if the he or she cannot independently perform two of the following activities of daily living: eating, bathing, dress, transferring, toileting, incontinence or cognitively impaired.
  • The person must 65 years or older

The IRS Publication includes following write offs:

  • Ambulance
  • Annual Physical Examination
  • Artificial Limb
  • Artificial Teeth
  • Bandages
  • Body Scan
  • Braille Books and Magazines
  • Capital Expenses
  • Car
  • Chiropractor
  • Christian Science Practitioner
  • Contact Lenses
  • Crutches
  • Dental Treatment
  • Diagnostic Devices
  • Disabled Dependent Care Expenses
  • Drug Addiction
  • Drugs
  • Eye Exam
  • Eyeglasses
  • Eye Surgery
  • Guide Dog or Other Service Animal
  • Health Maintenance Organization (HMO)
  • Hearing Aids
  • Insurance Premiums
  • Laboratory Fees
  • Legal Fees
  • Lifetime Care—Advance Payments
  • Meals
  • Medicines
  • Nursing Home
  • Nursing Services
  • Operations
  • Optometrist
  • Organ Donors
  • Osteopath
  • Oxygen
  • Physical Examination
  • Prosthesis
  • Psychiatric Care
  • Psychoanalysis
  • Psychologist
  • Stop-Smoking Programs
  • Surgery
  • Telephone
  • Television
  • Therapy
  • Transplants
  • Wheelchair
  • X-ray

Items that might not be included are:

  • Long-Term Care Insurance premiums
  • Eyewear
  • Hearing aids
  • Life insurance
  • Funeral Expenses
  • Insurance Premiums
  • Nonprescription Drugs and Medicines
  • Nutritional Supplements
  • Personal Use Items

 

For current regulations, review IRS Publication 502 and 501 along with the Alzheimer’s website or helpline.

Employment Implications:  In addition to the time required for filing out your own annual tax return, now you have a little more work – locating earlier tax forms filed out by our loved one.  Some seniors might refuse to assist you in locating the papers because, “I do not want you in my financial business!”  At that point, you can try to reason with them or just find them yourself.  The next search will be to find out if the insurance premiums are tax-qualified.  And lastly, at the assisted living facility, remember to ask the bookkeeper how much of the entrance fee is considered medical or care related.

If you take time off from your position, it would be to meet with your CPA, to call the bookkeeper or scream out of frustration.  The first year may be overwhelming – take notes on the process you created to make following April 15th easier.

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