Can LTC nursing home expenses be tax deductible? What is your experience and what paperwork do I need?

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Can LTC nursing home expenses be tax deductible? What is your experience and what paperwork do I need?

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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!

Claiming Elderly Dependent Paying for Care Skilled Nursing Facility Taxes

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There needs to be a "Care Plan" prepared by a medical professional and there needs to be a prescription for NH care. This is all laid out in IRS publication 502.

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.

Kiplinger article:

https://www.google.com/amp/s/www.kiplinger.com/article/retirement/t036-c005-s004-deduct-expenses-for-long-term-care-on-your-tax-return.html%3famp

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.

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I'm pasting in here the language from IRS pub. 502. If the purpose of being in the LTC facility is to receive needed medical care, the entire cost is deductible even if some of the service received isn't medical, e.g., meals,, but are "maintenance and personal care services." Note that medical necessity includes the need for "substantial supervision" of cognitively impaired individuals. Nowhere in the tax return or regulations does it say that documentation needs to be provided with the return. As with other itemized expenses or deductions, if the IRS audits you would need to be prepared to provide documentation. So, I would say there is no need to get any additional documentation at this time, but hang onto copies of the NH bills that have been paid.

"Long-Term Care
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)."

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I'm not a tax professional, and the IRS publication 502 is your best guide, but I assume a LTC nursing home would not accept someone unless they meet the "medical necessity" threshold. I believe the evaluation and documentation of need is required in our state for the facility to have its license. My brother in law is in such a facility and the full cost is deductible as a medical expense. He's exhausted his assets and is on Medicaid, but his share of the cost, based on social security and small pension, is still deductible. The IRS does not demand documentation or proof from the nursing home, and in any case his NH bills aren't itemized to break down the categories of service he receives.

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You are absolutely correct.

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My dads accountant had me submit a form to dad's SNF that indicated what things he was not able to do on his own and had to be completed by a medical professional.

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Hi, and thank you. Was the entire cost of the SNF deductible, then? What state was this?

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See an accountant. The answer is that yes it can be deductible, but it is only deductible when a huge amount is spent. The question came up from my brother who was in ALF at about 5,000 a month. His accountant said to let him know when there were higher levels of care or MC which would be very costly indeed. So I don't know what the rules are, but the amount being spent monthly is quite large.
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.

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Thank you for the insight on the tax person.. At a minimum I will explore that. The amount in total IS quite large-- larger than yours was. We do know the formula but it is the subjective question is if it meets the criteria,

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If you are getting mixed signals you really need to seek out a tax person with up to date, state of the art experience in tax preparation for dependent adults in your area.

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.

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Thank you for the input! We may just do that...or at least ask around...

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You do not indicate if you are paying or if your father is paying and who wants to deduct the expenses. If you are paying, and you take your father as a dependent, then you can deduct what you are paying. If payment is from your father's assets, and he files independently, the costs can be deducted on his tax return. In either case, however, keep two things in mind: (1) medical expenses can only be deducted if deductions are itemized and (2) the medical itemized deduction is only the amount above 7.5% of the adjusted gross income on the return.

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Hi, and thank you, It is from Dad's assets. We do have all of the receipts and are prepared to itemize, but the language on whether it 'qualifies' is subjective. It seems to come down to if it is qualified medical care, and if it is medically necessary. He cannot do at least 2 ADLS, which appears to be a criteria. However, other references indicate it must distinguish between medically necessary and "custodial" care. My NH will do whatever they need to provide, I just want to make sure I'm obtaining the correct forms and documentation

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Does he have LTC insurance and if he does did they give out money to pay for his place? There is a form on the federal taxes that you have to put the LTC income in and if its per diem there is a box that is checked it will go to the worksheet to fill out and yes its taken off of federal taxes and some state taxes follow what the federal govt says.

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.

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Thank you. He does not have LTC insurance. The NH breaks out the line items' by Room/Board, and then 2 sections for taxes. They have indicated one of the tax lines is usually used for the medical part, but the receipt does not specifically break out a medical section-- I know other facilities do. And I have read that the entire amount (including room/board) is deductible too. I just need some concrete answers, as this part is subjective!

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My Mom in memory care almost 5 years. She has assets to cover her expenses, her taxes are filed individually using Turbotax. We include all expenses paid for her care (well over $100,000 annually). Once we have itemized sufficient deductions to reduce her taxes to zero we stop and file. No questions from IRS so far. From reading the IRS info you should be ok.

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Thank you, not sure how to definitively prove it is medical, although that definitely was a factor for the NH care. How to define "Primarily custodial" is what I'm trying to get a definitive answer for!

Can LTC nursing home expenses be tax deductible? What is your experience and what paperwork do I need?

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