For a parent to move into an assisted living facility, a realistic budget must be developed. You may start outlining finances after you know with reasonable certainty how much the monthly price will be. This often turns into a family matter.

If a parent's income and assets are a bit short, it's usual for adult children to chip in and assist with care costs. When that occurs, the subject of whether assisted living is tax deductible frequently comes up. It's unfortunate that the solution is rather complex.

Costs of assisted living and Tax deductions

While some families are unaware that they may qualify for a tax benefit, others who are aware of it believe the procedure to be too difficult to understand. Uncertainty is mostly caused by the difficulty of identifying how much of a senior's monthly expenses qualify as medical care. Determining whether a senior fits the requirements to be a dependent is a further challenge.

For each of those problems, a simple solution does not exist. Some senior living facilities can provide a breakdown of which monthly costs are deemed to be for custodial care and which are for medical treatment. This can aid in resolving the initial problem. The second one will be a little trickier.

We normally advise families to seek the services of a tax expert with experience in the elder care sector, as we are not in the business of providing tax advice. Reviewing many sections of the tax code that deal with senior care and tax deductions before your meeting could be helpful:

Publication 502 of the IRS:

The guidelines for medical and dental expenses are described in this document. It will help you comprehend what the IRS classifies as medical treatment and the minimum income requirement. The definition of a "qualifying relative" is also included in this section of the IRS tax law. This is crucial in figuring out whether the connection to your family member satisfies the requirements.

IRS Tax Publication 503:

Like release 502, IRS tax publication 503 goes into further detail on what dependent care costs are. It also specifies the costs of medical treatment for a loved one that can be written off.

Alternative Methods to Pay for Assisted Living for a Loved One

Other initiatives may contribute to the cost of a senior's relocation to an assisted living facility:

• Input and Assistance Veterans' benefits.
• Long-term care insurance, which frequently assists in financing expenses other than nursing homes.
• Bridge loans are used to pay bills while families sell other assets.
• Financing for life settlements that compensates you for amounts beyond the face value of a life insurance policy.

When you visit Heritage Care Home Senior Living, the staff can go through these and other alternatives in further detail. You might also find our Senior Living Funding Guide useful. Families may read and discuss this free eBook together as a wonderful resource.