Our family is looking into deducting the cost of Dad's nursing home expenses for the past year. Initially the NH indicated it was only the "tax" they charge monthly, but when I researched this, including the IRS, it does indicate that if the patient is chronically ill and cannot do 2 ADLs without assistance, and was "prescribed" to be in NH, then it qualifies. But I am getting mixed signals the more I read, and my tax person didn't seem to help, except indicating a "Prescribed" NH will do whatever we need them to do, paperwork wise. This is in New York. Can anyone share if they have done this, and any insight? Thank you!
Also, medical expenses on an itemized tax return must meet a certain percentage of AGI (Adjusted Gross Income).
We actually moved my LO’s tax preparation to our very savvy accountant, and the result was a nice return. The previous accountant continues to do other family taxes, but was just out of his league for our needs when it came to state and local taxes for our LO.
Good for you, for advocating aggressively to protect your LO.
I know this because I had to fill one out just recently for a client. But I am not in the state NY so I don't know what their rules are.
Like others have said its 7.5% of the income but what I usually do is put all the nursing home expenses that he pays for down on a SCH A that includes medicine that he pays for too sometimes that is left out. Anything in the medical part of the itemized deductions you can use as long as you have receipts for or statements for. You have to have those incase the IRS audits you.
There is an EASY forumula on this so if your tax person doesn't know it you definitely need another tax person. This is not rocket science in the world of accountancy.
You can include in medical expenses amounts paid for qualified long-term care services and certain amounts of premiums paid for qualified long-term care insurance contracts.
Qualified Long-Term Care Services
Qualified long-term care services are necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, rehabilitative services, and maintenance and personal care services (defined later) that are:
Required by a chronically ill individual, and
Provided pursuant to a plan of care prescribed by a licensed health care practitioner.
Chronically ill individual.
An individual is chronically ill if, within the previous 12 months, a licensed health care practitioner has certified that the individual meets either of the following descriptions.
He or she is unable to perform at least two activities of daily living without substantial assistance from another individual for at least 90 days, due to a loss of functional capacity. Activities of daily living are eating, toileting, transferring, bathing, dressing, and continence.
He or she requires substantial supervision to be protected from threats to health and safety due to severe cognitive impairment.
Maintenance and personal care services.
Maintenance or personal care services is care which has as its primary purpose the providing of a chronically ill individual with needed assistance with his or her disabilities (including protection from threats to health and safety due to severe cognitive impairment)."
If your loved one is in the NH for MEDICAL reasons (heart failure, ESRD or other medical conditions) the entire expense is deductible as long as it is greater than 7.5% of his income and you itemize it on Schedule A.
If your LO is receiving primarily custodial care, then only the medical care is deductible.
www.bogleheads.org is a great site for financial question like this.
PS, you need a new tax preparer; better yet, use Turbo Tax. You're doing all the legwork anyway.