Tax Deductions for Senior Living

As you are collecting the information you need to file your taxes or have your taxes prepared for you, one deduction you don’t want to overlook is the cost of senior care. If you help pay for an aging parent’s care, you may be entitled to a tax deduction for senior care or at least a portion of those expenses.

IRS Tax Rules for Caregivers

For a caregiver to receive a tax deduction, the person you are providing care for must be a spouse, dependent, or qualifying relative. A qualifying relative is a parent or stepparent, father-in-law or mother-in-law, or another person who was a member of your household all year long.

There are several additional qualifications that must be met:

  • The person receiving care must be a S. citizen or resident of the U.S., Canada, or Mexico.
  • You must meet what is known as the 7.5% rule. It means you may only deduct medical expenses if they exceed 7.5% of your adjusted gross income. Note: this is the combined total of your medical expenses and those of your senior loved one.
  • The relative must meet the gross income and the joint return test to be considered your dependent. It means they cannot have a gross income in excess of $3,700 nor can they file a joint return for next year. If your relative doesn’t qualify as a dependent because of these tests, you cannot claim a dependency deduction. You may still be able to claim their medical expenses though. Check with your tax advisor to be sure.

Caregiver Tax Resources

To help you better understand how the IRS views the costs associated with elder care, we’ve pulled together a few additional resources:

Because of the complexities associated with claiming an aging family member as a dependent or writing off the costs associated with their health care, we always recommend caregivers seek the advice of a professional tax advisor. One who is familiar with and experienced at working with family caregivers is best.

 

Our newest community, The Village of Appledorn West in Holland, is open! If you or an older loved one would like to tour our independent living apartments or learn more about our assisted living community that will open in the spring of 2015, please stop by or call us at (616) 846-4700

 

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