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taxes and assisted living

Old 02-02-2015, 02:46 PM
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Default taxes and assisted living

are any assisted living expenses for elderly relatives (mostly room and board) tax deductible on their tax returns?
Not a skilled nursing facility but assisted living?
trying to get a general idea .
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Old 02-02-2015, 03:25 PM
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Its complicated, but yes some portion is deductible as medical expenses. As a medical expense you can only deduct the excess over 10% of AGI or 7.5% of AGI (determined based on age with older people using 7.5%) and even then as an itemized deduction it will be subject to phase out rules for "rich people."

The facility typically hires a consultant to determine how much is actually deductible. In my experience it is around 70-75%.
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Old 02-02-2015, 04:55 PM
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Originally Posted by TexomaPowerboater View Post
Its complicated, but yes some portion is deductible as medical expenses. As a medical expense you can only deduct the excess over 10% of AGI or 7.5% of AGI (determined based on age with older people using 7.5%) and even then as an itemized deduction it will be subject to phase out rules for "rich people."

The facility typically hires a consultant to determine how much is actually deductible. In my experience it is around 70-75%.
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Old 02-02-2015, 10:07 PM
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The facility typically hires a consultant to determine how much is actually deductible. In my experience it is around 70-75%.
I'm thinkin' it's similar to this ^^^.

When I had power of attorney for my aunt, I think the assisted living facility used a consultant ((or the owner's of the facility?) each year for the determination, and that's what her accountant used (we didn't have any problems with the deduct ).

There is a "cost per month" or "cost per day" for the facility and I think they subtract out the value that the facility uses for food and similar items that the residents HAVE TO HAVE anyway. So, say the cost per day is $150 TOTAL, but the food and other "necessities" come out to $50. The consultant will come up with $100 as the "deductible" amount for tax purposes OR, they may use a "%" - 33% in this case - to deduct from the cost per day to get the deductible amount.

They will usually send out a letter to the residents (or responsible party) each year as to the deduction computation.

You MAY need to ask for one if you haven't received it by now.

Hope this helps.

Regards,
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Old 02-03-2015, 04:22 AM
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I have a letter in front of me from 2013. Not my family, it is a client's. There are monthly fees at this place, plus an entrance fee.

8% of the monthly fee is deductible as a medical expense.

It gives a flat dollar amount for the % of the entrance fee that is deductible. In this case, it is $34,750 for a single person and $45,000 for a couple. Keep in mind this is not a high end community. Probably in the middle.

There are several Guaranteed Refund options related to the entrance fee, and these can greatly reduce the medical expense deduction.

You may want to look at the website for the facility you are looking at. They may have the letter posted there. Even the prior year will give you a good idea because the values don't change much.
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