Tax guru I am not, but I thought it might be helpful to review some of the federal tax rules related to family care providers’ medical and dental expenses. Since this is a pretty long article, I’ve written it in two parts. This is Part II. See Taxes Part I for some information on who qualifies for deductions. this was written during the 2009 tax season.
Long Term Care:
* Long-term care medical expenses are deductible if the services are required by a chronically ill individual (see below) and are provided by a licensed medical professional. These include “necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, rehabilitative services, and maintenance and personal care services.”
* To be considered chronically ill, one must meet either of the following: (1) unable to perform at least 2 of the following daily tasks without “substantial assistance” for at least 90 days. These tasks are: eating, toileting, transferring, bathing, dressing and continence. Inability to perform these tasks qualifies whether that inability is caused by physical or mental impairments. (2) the individual requires “substantial supervision to be protected from threats to health and safety due to severe cognitive impairment.”
* Long-term care insurance premiums are deductible medical expenses, but they must meet the contract criteria.
* Home medical assistance and nursing services are deductible. If the person qualifies as chronically ill, some non-medical home care may also be deductible.
* Medical expenses associated with community living (nursing homes, assisted living facilities, or similar facilities) are deductible. These expenses only include the cost of medical care provided at the facility. Therefore, rent fees, meals and other personal expenses in the community are not deductible.
The information I have provided here only refers to federal taxes and doesn’t cover all of the details and rules applicable to caregivers. While I do highly recommend reviewing IRS Publication 502, a user friendly resource loaded with useful information, I also strongly recommend consulting a professional for advice.
Caregiving and taxes are a complicated combination, as caregiving circumstances vary greatly from family to family and tax rules are sometimes very confusing. Your particular situation may entitle you to more or fewer deductions than you realize, or may have filing implications that are unclear. For instance, say you support a qualifying relative who lived in a nursing home in a state different from yours for half the year, and in your home for the other half. Now you are dealing with two different states’ tax rules in addition to federal. A professional will be able to guide you through the complexities.
If you or someone you know needs a referral to an eldercare tax specialist, give me a call, 207-272-2797, or email me at Lpeel@MaineSeniorGuide.com