Tax time is upon us and as we age things like assisted living and medical expenses become the norm and also become something that we consider in terms of tax write-offs. There are so many different things that are tax deductible and making sure that you are writing off expenses that you can write off can save you money.
Are Assisted Living Expenses Tax Deductible?
There are plenty of deductions that have to do with medical expenses that we might not be aware of or that we may not know how to properly count. Assisted living expenses, to a certain extent and when fitting a specific set of criteria can be counted off on your taxes up to a certain amount. You cannot simply write off all of your assisted living expenses or all of the expenses that you pay for a family member, in most cases, you can however write off a portion of the cost up to a certain amount that is dictated by your country and by the state that you live in.
There are tons of tax deductions that you might not even think about that can impact your overall deductions and help you get more money back each year. When it comes to medical expenses for example, if you pay out of pocket you can deduct the amounts that you are paying out of pocket.
In short, yes, some assisted living costs can be written off as medical expenses paid out of pocket when you are filing your taxes. It is important to take the time to make sure that the type of assisted living you are dealing with counts, that you are making sure you have the proper documentation, and that you are taking the time to account for the assisted living costs and income.
How Do I Tell if Assisted Living Expenses are Deductible?
There are a certain set of requirements that the assisted living expenses must meet. You cannot simply write off the entire cost just because you are paying it for a relative or yourself. The expenses must be related to someone that is either chronically ill, cannot stay by themselves, or that are in need of constant or very frequent medical attention. This could apply to someone that has dementia for example. If the assisted living was recommended or prescribed by a medical professional it can also count as a deduction.
A great way to start is to think about how much of the income of the person paying the assisted living fees goes toward those fees. If you pay more than 7.5% of your gross annual income toward the assisted living costs can you count it as medical expenses then have it written in as a deduction. This is especially helpful in cases where someone is on a fixed income and is paying a large portion of their income to pay assisted living costs.
No matter what the situation is with the assisted living costs that are being paid, it always helps to take the time to talk with a tax professional. It is far better to take the time to talk to someone that knows about tax laws and about what can be counted than it is to just start writing things off and hoping that they will pass and that you will not have to face an audit. Though the cost of assisted living is often high, you can write some of that cost off if you know how to count it, what information to include, and how to properly account for the costs.