Assisted living is expensive, and many families want to know whether any of it comes back at tax time. Some of it can, as a medical expense, but the rules are specific. Here is what determines whether the cost qualifies.
The IRS allows you to deduct qualified medical expenses that exceed 7.5% of your adjusted gross income, if you itemize. Assisted living costs can count as medical expenses, but generally only the portion tied to medical care or personal care for a chronically ill resident, not the room and board by itself. The details are laid out in IRS Publication 502.
If a resident is chronically ill, meaning a licensed professional has certified that they need help with at least two activities of daily living, such as bathing, dressing, or eating, or they need supervision due to cognitive impairment, and the care is provided under a plan of care, then a larger share of the cost can qualify as a medical expense. In some cases that includes room and board when the primary reason for being in the facility is to receive medical care.
If a resident is in assisted living mainly for housing and convenience rather than medical need, only the clearly medical services, such as nursing help or medication management, are deductible. The rent and meal portion is treated as a personal living expense and does not count. The facility can usually break out the medical share for you, which is the figure you would use.
You can deduct qualifying medical costs you pay for yourself, a spouse, or a dependent. A parent may count as a dependent for this purpose even if they do not live with you, provided you cover more than half of their support and other tests are met. That means an adult child paying for a parent's care may be able to claim the medical portion, which surprises many families.
Hold on to the itemized statements that separate care from room and board, the plan of care, and the professional certification of chronic illness if one applies. The IRS does not want these with your return, but you need them if asked. A tax professional can confirm how much of a specific bill qualifies. You can estimate the underlying cost in the assisted living cost calculator.
One detail decides whether any of this helps: you can only deduct qualified medical expenses above 7.5% of your adjusted gross income, and only if you itemize. For a resident with high care costs relative to their income, that threshold is easy to clear, and the deduction can be meaningful. For someone with modest costs and higher income, it may not reach far enough to matter. Run the numbers for the specific year.
Part of the cost can be, as a medical expense, if you itemize and your total qualified medical expenses exceed 7.5% of your adjusted gross income. For a chronically ill resident receiving care under a plan of care, a larger share, sometimes including room and board, may qualify.
Generally the medical and personal-care portion. If the resident is chronically ill and care follows a plan of care, more of the bill, potentially including room and board, can count. If the stay is mainly for housing, only the clearly medical services qualify.
Possibly. If you pay more than half of your parent's support and they meet the dependency tests, you may deduct the qualifying medical portion of their care that you pay, even if they do not live with you. A tax professional can confirm eligibility.
Keep itemized facility statements that separate care from room and board, the plan of care, and any professional certification that the resident is chronically ill. You do not file these with your return, but you must be able to produce them if the IRS asks.
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