Deducting Assisted Living Costs

With the due date approaching for the filing of an income tax return, some may wonder if the costs paid to an assisted living facility are deductible.

In order to deduct assisted living costs for income tax purposes, an individual needs to obtain a written statement from her doctor which states that:

1. The client is a chronically ill individual

2. The client is unable to perform without assistance at least two of the following activities of daily living: eating, toileting, transferring, bathing, dressing, and continence, OR she requires substantial supervision to be protected from threats to health and safety due to severe cognitive impairment, and

3. The client’s care requirements include maintenance and personal care services, i.e. care which has as its primary purpose the providing of a chronically ill individual with needed assistance with her disabilities, and

4. That the physician prescribes that such care be provided by her current assisted living facility or a similar facility

Also, before filing the tax return, the tax return preparer will need (in addition to the total costs at the assisted living center) a breakout (normally done as a percentage and provided by the assisted living center) of what percent of the total cost is for “assisted living care” verses food or lodging.

See IRS Publication 502