Tax Deductions and Senior Care: What Families Should Know
March 12, 2018
Wondering if your assisted living expenses are tax deductible? This information from Legacy Senior Living can help you learn more.
When an older adult is ready to downsize and move to a senior living community, families often work together to create a budget and a plan for financing their transition. In fact, how to finance retirement living is one of the questions we receive most often during our conversations with families.
There are many myths and misunderstandings that can make financing senior living especially confusing for seniors and their loved ones. For example, some adult children mistakenly believe a parent’s Medicare will help pay for all or part of their loved one’s assisted living expenses. Unfortunately, it does not. But there are other programs to help finance senior care that are often overlooked.
Financing Senior Living
Here are a few potential funding solutions to explore:
- Aid & Attendance pension benefits for veterans and surviving spouses
- Life settlement funding that allows a senior to sell a life insurance policy
- Short-term loans to help bridge the gap between when a home is sold or asset is liquidated and a senior moves to assisted living
- Long-term care insurance policies that cover assisted living
Older adults or their families can also meet with a tax advisor to discuss the tax deductions available for senior care expenses.
Senior Care Expenses and Tax Deductions
When it comes to senior care tax deductions, the laws can be more than a little complicated. We typically recommend that families seek the advice of a tax professional who has experience working with aging service providers. An experienced tax advisor will be able to determine if you or your senior loved one meet the qualifications for a tax deduction and how much you are entitled to deduct.
Before your meeting, we suggest you review two different areas of the tax code that pertain to senior living:
- IRS Tax Publication 502: This publication outlines the medical and dental expense regulations. It will give you a better understanding of what the IRS considers to be medical care and what financial threshold you must meet. It also includes the rule on what a “qualifying relative” is.
- IRS Tax Publication 503: Like publication 502, this IRS publication further explains dependent care expenses. It also covers which expenses you can deduct for a spouse’s medical care.
Financing Senior Living
While we can’t give you advice on tax deductions for senior living, we can help you explore potential funding solutions. Call the Legacy Senior Living community near you to schedule a time for a personal visit.