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I know there has been a lot of back and forth with the new tax bill as far as eliminating deductions but as I understand the medical deduction is still available in the new signed tax bill. As I understand it the entire cost of memory care can be used as a medical deduction because cognitive impairment is counted as a medical condition.


I was wondering if anyone has successfully deducted the cost of memory care. My parents are self paying memory care and part of their savings are in the form of IRA and bonds that would generate a tax when cashed in....so it would help if i had this deduction.


Found below in research.. also had a handout from my memory care about looking into this tax deduction.


Because eligibility for the medical expense deduction should not be diagnosis driven, the provision requires the cognitive impairment must be severe. Severe cognitive impairment means a deterioration or loss in intellectual capacity measured by clinical evidence and tests. These tests should reliably measure impairment in short or long term memory; orientation to people, place and/or time; and deductive or abstract reasoning. In addition, it is intended that such deterioration or loss place the individual in jeopardy of harming self or others and, therefore, require substantial supervision by another individual.
In the past, amounts paid to nursing homes qualified as medical expenses only if medical care was the principle reason for the stay, or if not the principle reason, only that part of the cost of care attributable to medical care qualified (not meals and lodging) (Reg.1.213-1(e)(1)(v). The enactment of Internal Revenue Code Sec. 213(d)(1) included qualified long-term care within the definition of “medical care”. This means that amounts paid to nursing homes as well as other long-term care facilities and assisted living facilities can qualify as medical expenses. Provided the person meets either the activities of daily living (ADL) or cognitive impairment requirements and the costs are pursuant to a plan of care prescribed by a health care practitioner, the amounts paid will qualify as medical expenses.

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In order to claim medical and dental expenses, the individual's total must exceed 7.5% of AGI.
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Check to see if there is an AARP site, CASH or VITA site to prepare your parents and possibly your taxes at no charge. I know CASH and VITA are available by calling 211 after the 21st of January. The AARP sites I think you can contact AARP directly to see if they have a site in your area. I volunteer as a tax preparer for the VITA/CASH program in our area and the medical deduction is available on their 17 tax return and should cancel out any tax liability from using their IRA investment funds used to cover this expense. This wasn't going to be continued in the new tax law, but we lobbied to not have it eliminated for this exact reason.
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My CPA firm is one of the top in a major city and we use one of the partners. He says that since medical signing off is required to live in a Memory Care, 100% of MC is deductible as medical expense. If certain Activities of Daily Life expenses are charged separately, then you need a statement from the doc that those are required because your patient lacks the capacity for that ADL. For example, when we first moved mthr in, there was a separate $100 charge for laundry. We had the MD sign a note before the end of the year that because of her medical condition, housekeeping services were required including laundry. We also asked the MC to please wrap all her charges into one line item on the invoice.
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My sister was in hospice care for 16 months before she died in September from emphysema. She needed 24/7 care, which I provided for a year before I had to move her to a board and care home, with round the clock caregivers, and hospice care for her meds, advice, personal care like bathing, etc. (Being a one-person care giver 24/7 was too stressful for me and was impacting my own health, mental and physical.)  She was mostly bedridden, could not walk more than several yards using a walker, and eventually became totally bedridden.  

I paid the board and care cost from her pension income every month, as I was a signer on her account. The cost was significant, and now I'm planning to file her tax return for 2017. I'm very confused as to whether I can deduct all the costs, or part of the costs, as a medical expense. The expense for the 10 months she was living there took all of her pension income plus money from her savings account, so it will be way over the 7.5% of her Adjusted Gross Income. This would be her only deduction. It will be a simple 1040 with Schedule A. I would appreciate any advice. Thank you!
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My friend's tax preparer deducts all my friend's memory care costs, which far exceed his income, so everything withheld during the year comes back. It just about makes one month's payment. And I can freely withdraw from his IRA and not worry about the tax consequences since it will all come back in the spring. That's one less thing for me to worry about as his POA.
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My husband is a cpa and does my dad’s taxes. We deduct all of dad’s memory care expenses on his taxes.
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It seems CPAs are all over the place in this. My dad is in AL and last year the facility could not separate out medical vs non medical expenses. So my CPA took a portion as deductible. Ginach, I wish we had deducted the entire amount last year. I will ask her about it this year.
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My accountant who also handled my dad’s taxes said that the entire assisted living monthly payments were valid medical expenses because my dad had a written assessment signed by his doctor that stated that my dad needed that level of care.
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Thanks for clarifying, thay90. So they kept it at 7.5% for those over 65 for 2017 (after raising it to 10% for everyone else) until January 1, 2017. And now the new tax law has lowered the threshold for everyone to 7.5% retroactively to January 1, 2017. Confusing!

(We have an accountant do our taxes, as we have a small business.)
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Yes, it was set to go back to 10% for seniors, but the new bill has it at 7.5% for everyone for 2017 retroactively and 2018. First and possibly last time I'll ever get to use medical and itemize for myself!
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Katiekay, it is my understanding that the 10% exclusion has been rolled back to 7.5% in the new tax bill. This change applies to 2017 and 2018, however in 2018 the standard deduction is about double, so many people may no longer itemize. You will probably still itemize in 2018 if the cost of memory care is anything like most. My mom's cost was $5,400 per month, so twelve months of that was almost $65,000. Added to the cost of health insurance, copays, dental care, glasses, hearing aids, pharmacy, etc., even with an income of $100,000 per year and the resulting exclusion of the first $7,500 of expenses, you will definitely be better off if you itemize. My mom's deductible expenses exceeded her income for the last several years of her life, so she paid no income tax.
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Fortunately (or unfortunately) for me ... the cost of memory care for my parents will exceed both 7.5 and 10 percent.. of their adjusted gross income. (since with cognitive decline you can deduct the entire amount of memory care).

I guess we are lucky the medical deduction even still exists for those with very high out of pocket expenses... but it would have been nice to keep in at 7.5 for the current year at least.

Thanks everyone for your input on this.
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"For 2017 their medical expenses would have to exceed 7.5% of their adjusted gross income"

Not according to this:

"If you itemize your deductions on Form 1040, Schedule A, the threshold for unreimbursed medical and dental expenses you paid for yourself, your spouse, and your dependents must exceed 10 percent of your adjusted gross income before a deduction is permitted.
Most people who itemize their deductions can claim deductions for unreimbursed medical expenses, those which are not covered by health insurance, that exceed 10 percent of their adjusted gross income.
Temporary exemption for taxpayers age 65 and older
There is a temporary exemption for individuals age 65 and older until Dec. 31, 2016. If you are 65 years or older, you may continue to deduct total medical expenses that exceed 7.5 percent of your adjusted gross income through tax year 2016. If you are married and only one of you is age 65 or older, you may still deduct total medical expenses that exceed 7.5 percent of your adjusted gross income.
This exemption is temporary. Beginning Jan. 1, 2017, the 10 percent threshold will apply to all taxpayers, including those over 65."

https://www.irs.gov/individuals/changes-to-itemized-deduction-for-medical-expenses
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My Dad used a CPA for his income taxes, and certain things were allowed to be deducted and other things were not... as thay90 had mentioned it is a case by case basis. This definitely wasn't a DIY situation, way too complex :P
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katiekay -- For 2017 their medical expenses would have to exceed 7.5% of their adjusted gross income, plus then any of those expenses over the 7.5% would have to exceed their standard deduction (for married filing joint their standard deduction would be $12,700) when added together with local taxes, charity, etc.

Different tax preparers may ask for different documentation. I know some of our clients actually have statements from their facilities that itemized out what is "room and board" and what is "medical" -- though it sounds like in your case it may all be considered medical. I don't know any Dallas area preparers, but I would suggest looking for a CPA firm or an EA. H&R Blocks are really hit and miss on if they have properly trained people.
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Thanks for the answer Thay90!

My parents are in memory care because of there lack of cognitive abilities. Do you have any suggestions of what tax pros I should look for who could handle this? (I live in the Dallas area in Texas. Last year I didn't itemize their taxes and just went to H&R block...

What supporting documents are required to take this deduction?
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I'm a tax preparer and have many clients that we do their aging parents tax returns as well. If it is a condition they have that needs memory care -- we take it as part of their itemized deductions. If they're just staying at an independent living facility for companionship and convenience, we don't take the full cost, we take the medical portion. Obviously it's a case-by-case basis and depends on who prepares your taxes.
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