Official IRS Rules of Assisted Living Expenses

Most assisted-living expenses are deductible.

Most assisted-living expenses are deductible.

If you're trying to assist aging parents or planning for your own future, you might need to understand how the IRS treats assisted-living expenses. Allowed deductions might affect your choices because they can substantially change the real cost of various types of long-term care. This is true if you are paying the bill for yourself or for a family member.

Staying at a Care Facility

If you need care inside of an assisted-living facility, the Internal Revenue Service says that you can deduct the cost of medical care as a medical expense. This includes institutions called nursing homes, homes for the aged and similar types of facilities. In this case, your deduction can include the cost of lodging and meals if the primary reason that you are confined to an assisted-living facility is to obtain health care.

Getting Care at Home

If you have nursing services inside of your own home, you are allowed to deduct the cost of nursing care as medical expenses. Furthermore, these services do not actually have to be performed by a licensed nurse. They just need to be the kind of medical services that a nurse normally provides. This could include changing bandages, dispensing medicine and bathing.

But Who's Cleaning the House?

In general, the at-home deduction does not include general housekeeping. For example, if your assisted-living provider spends 50 percent of her time performing nursing care and 50 percent of her time washing clothes or doing dishes, you can deduct only half the overall cost. However, the IRS says that you can deduct maintenance or personal-care services for individuals who require this assistance to maintain their health and safety because of an illness or disability. In other words, if the patient is unable to prepare her own food because of her health condition, it could be deductible.

Understanding Who Qualifies

Patients also have to be qualified to receive assisted-living services on a long-term care basis. The IRS Tax Guide For Seniors defines these qualifications. The definition of qualified services is those that are required by a chronically ill individual and are prescribed by a licensed health practitioner. To be considered chronically ill, an individual must satisfy at least one of the following requirements. She cannot be able to perform at least two activities of daily living. These are eating, toileting, transferring, bathing, dressing and continence. The second condition is that she must be supervised to prevent threats to safety and health.


About the Author

Based outside of Houston, ML Katz has been writing financial articles since 2000. During that time, she also worked as a financial professional and website developer. She received a Bachelor of Business Administration with a concentration in information systems from the University of Texas, Austin in 1981.

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