Assisted Living Expenses

[mrbill]

Client is in a motorized wheelchair 24/7. . I have been deducting 80% of the monthly fee from the Retirement home as a medical deduction. Never questioned by the IRS. Am I correct ? Thanks,

[Uncle Sam]

The retirement home should provide your client with a statement of some kind that establishes an amount or a percentage of the total amount paid considered to be medical expense related.

[FEDUKE404]

The retirement home should provide your client with a statement of some kind that establishes an amount or a percentage of the total amount paid considered to be medical expense related.

If the person is in a "retirement facility" then that facility normally prepares an annual statement of the type you describe, especially if an onsite resident clinic or similar is present.

OTOH, if the person is in an "assisted living facility," then it is not uncommon for ALL of the (non-oersonal) costs of being there to be considered a medical expense.

Coming up with something like "80% of the monthly fee" could eventually present substantiation problems, even if the IRS has not (yet) questioned the validity of those expenses.

[Lion]

See the section "Qualified long-term care services" to see if it fits your client's situation: https://answerconnect.cch.com/intrad...013e2c84a68460 ( Code Secs. 213(d)(1), 7702B(c)(1)). Also, see Notice 97-31

[FEDUKE404]

See the section "Qualified long-term care services" to see if it fits your client's situation: https://answerconnect.cch.com/intrad...013e2c84a68460 ( Code Secs. 213(d)(1), 7702B(c)(1)). Also, see Notice 97-31

This link appears to be from a pay-to-view site ? ?

[Lion]

Sorry for the first one. Did you try Notice 97.31? Or, https://www.irs.gov/faqs/itemized-de...-care-expenses

[FEDUKE404]

Sorry for the first one. Did you try Notice 97.31? Or, https://www.irs.gov/faqs/itemized-de...-care-expenses

Not a problem.

The IRS link seems to address the two separate categories: If you are in a facility for essentially medical reasons (assisted living) then you likely can deduct everything. But if you are in retirement facility, albeit with some physical disabilities (limited mobility / vision / etc) then it is likely that a large part of the resident expenses are NOT "medical" (as opposed to a dementia scenario). There is a vast gray zone in between, and that is where the head-scratching can begin.

The ADL score can often be a determining factor for the level of care that is required.

And I still don't think drawing a magic 80% number out of a hat would carry much weight on audit. Just my 2? worth.