For many families, assisted living is a necessary expense. The benefits from long-term care services are irrefutable, but the cost adds up quickly and often puts families in tough financial spots.
Fortunately, there are ways to lighten care costs that are legal and accessible for most families.
Are Assisted Living Expenses Tax Deductible?
Assisted living costs are tax-deductible, but it’s important to understand IRS criteria first. In order to deduct assisted living expenses, the resident must be chronically ill and require assistance with daily activities—all confirmed by a healthcare provider.
However, not every expense is deductible. Medical care costs, like nursing services, qualify, while rent and meals do not unless strictly tied to the resident’s care. Expenses exceeding 7.5% of your adjusted gross income can qualify.
How Do You Qualify Assisted Living as a Medical Expense?
To make assisted living expenses tax-deductible, you must present proper documentation and meet certain requirements.
- The resident must be unable to perform at least two activities of daily living (ADLs) OR have severe cognitive impairment with a doctor’s certification.
- Records of care plans, medical evaluations, and receipts for deductible assisted living expenses but they should be available during tax filing.
Be careful, since any assisted living expenses that aren’t of medical necessity don’t qualify.
Is Memory Care Considered a Medical Expense?
Memory care for residents with certified conditions like dementia often qualifies as a medical expense. This is due to the specialized care and therapeutic services provided in an assisted living facility.
Memory care consists of many more deductible medical expenses than assisted living. In most cases, higher deductibility rates apply when cognitive impairment is medically diagnosed and documented.
Do You Need a Doctor’s Note for Assisted Living Deductions?
For any qualified long-term care expenses, a doctor’s note is necessary. The IRS requires a licensed healthcare practitioner’s statement certifying a need for assisted living in order to qualify for medical expense deductions.
In this annual statement, it must include a plan of care and specify ADL assistance or specialized cognitive needs. Most assisted living communities have an on-site medical team that can assist in seamless documentation.
Can You Deduct Assisted Living Costs Without Itemizing?
Unfortunately, this isn’t possible. Medical expenses, including assisted living, are typically deducted only if itemizing on Schedule A (Form 1040), after exceeding the AGI threshold.
If you don’t plan to itemize, there are a few credit alternatives:
- Dependent Care Credit
- State-specific programs
Costs may apply differently for qualifying dependents, so make sure to research deductible expenses before filing.
What IRS Rules Apply to Senior Living Medical Expenses?
For a list of deductible long-term care services, see the IRS Pub. 502 is a helpful resource. Any insurance-covered expenses are excluded.
As of 2025, there aren’t any recent changes to thresholds or qualifications, but it’s always wise to consult a professional for advice on current rules.
Assisted Living Services for Seniors at The Manor Village
If you’re exploring assisted living options for a family member, The Manor Village offers compassionate and professional care tailored to individual needs. Contact us today to learn more about our services and how we can support your loved one’s well-being.
