If you’re caring for an aging parent at home and are considering assisted living as a future care option, chances are you’ve got dollar signs spinning in your head. It’s true that the costs of assisted living rise every year, which leaves many families wondering if they can get some money back by writing off assisted living expenses on their taxes. Fortunately, the answer is yes; several expenses related to assisted living, including medical costs, are tax deductible for the 2022 tax season. But there are some significant nuances regarding eligibility that you’ll want to be aware of before diving in.

Key Takeaways

Some, but not all, assisted living costs are tax deductible. Both you and your loved one must meet certain criteria to qualify.
You can deduct medical expenses related to assisted living costs. The expenses must total more than 7.5% of your adjusted gross income (AGI).
You can claim your parent as a dependent on your taxes. If you meet certain requirements, doing so can lower your tax bill.
You don’t have to be a paid caregiver to qualify for the Child and Dependent Tax Credit. Just make sure you meet Internal Revenue Service (IRS) qualification requirements.

What assisted living expenses are eligible for tax deductions in 2022?

Medical expenses related to a loved one’s assisted living costs may be tax deductible. Some examples of qualifying expenses might include the following:

Nursing services, such as medication administration
Assistance with the activities of daily living (ADLs)
Prescription medications (Note: You can deduct insulin without having a prescription for it)
Home modifications or medical equipment installed in a house to accommodate your loved one’s medical needs
Some medical devices, such as oxygen equipment, hearing aids, eyeglasses, and wheelchairs
Dental and oral care, including dentures, fillings, and some lab fees
Transportation to and from medical appointments
Insurance premiums that cover medical care, unless those premiums were paid with pretax dollars
Some costs of meals, lodging, and other personal costs of long-term care or stays at a hospital setting

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How to deducting assisted living expenses on your 2022 taxes

To deduct assisted living expenses from a tax return, you’d need to know what amount of your loved one’s monthly bills are attributed to medical services. Staff within an assisted living community should be able to share a history of provided services, which can be used to determine what was spent on medical care.

You’d also need to obtain an itemized record of these medical expenses. See Schedule A (Form 1040) to figure out your itemized deductions and the Internal Revenue Service’s (IRS) full list of eligible expenses that can be deducted.^[02]

For assisted living expenses to qualify as tax deductible in the 2022 tax season, the following requirements must be met:

The medical expenses add up to more than 7.5% of your adjusted gross income (AGI)
Your loved one in assisted living must be certified chronically ill by their doctor, meaning they either can’t carry out two or more activities of daily living (ADLs), such as eating, bathing, dressing, and using the restroom, without assistance or require
supervision due to a cognitive impairment, including various types of dementia.
Personal care services must be provided in accordance with a prescribed care plan outlined by a licensed health care provider.

Claiming a parent as a dependent

In many cases, you can claim your parent as a dependent on your income taxes even if they live in an assisted living community. Doing so can potentially lower your tax bill, allowing you to keep more of your cash. But, as with most anything tax-related, there are some important stipulations.

Before claiming a parent as a dependent on your federal income tax, the following requirements apply, according to the IRS:

The loved one you want to claim meets all residency requirements of either the U.S., Canada, or Mexico.
The loved one you want to claim is a “qualifying relative,” meaning they meet the following criteria:
They aren’t your child or another taxpayer’s child.
They’re related to you as a parent, mother- or father-in-law, grandparent, stepparent, or in any of the other ways listed in the IRS 2022 Publication 501. If they’re unrelated, they must have lived with you all year as a member of your household.
Their gross income for the year is no more than $4,400. (Note: Gross income doesn’t include Social Security payments or other tax-exempt income.)
You provided more than 50% of their support for the year. This includes covering costs like their food, lodging, clothing, transportation, and medical care. If that’s not the case, you may still be able to claim them if you paid more than 10% of their support for the year and have created and signed a Multiple Support Declaration.

There are a few instances where you won’t be able to claim your parent as a dependent:

If you could be claimed as a dependent by another taxpayer, you won’t qualify to claim your own dependent. If you’re married and filing jointly, the same goes for your spouse.
If your parent is married and filing jointly, they can’t be claimed as your dependent.

Even if you can’t claim your parent as a dependent, you may still be able to deduct their medical expenses. Explore IRS Publication 501: Dependents, Standard Deduction, and Filing Information for more clarity on how to claim an elderly relative as a dependent.

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Additional tax credits, resources, and support

Even if you don’t consider yourself a formal caregiver, you’ve likely allocated some amount of time, money, and energy to caring for your aging parent. With that in mind, you could qualify for a caregiver tax credit, particularly if you claim your loved one as a dependent on your tax return.

Explore the tax credits below. Remember, if you’re at all unsure of what credits or deductions you’re eligible for, contact a qualified tax professional for assistance.

The Child and Dependent Care Credit, provided you meet certain requirements, is a credit that can be claimed if you covered costs for a qualifying dependent’s care. Enhancements and modifications are often made to this tax credit each year, so make sure you’re up to date on the current tax season’s qualifications.

To qualify for this credit in the 2022 tax season, you must file Form 1040, 1040-SR, or 1040-NR, and meet the following criteria, according to the IRS:

The care was provided to a “qualifying relative” or someone you can claim as a dependent.
You and/or your spouse must have earned income during the relevant tax year.
You must pay dependent care expenses that allow you to work.
The payments for your dependent’s care have been made to someone you aren’t claiming as a dependent.
Your filing status is single, head of household, or qualifying surviving spouse. If you’re married, you’ll need to file jointly.
The care provider has to be identified on your tax return, including their name, address, and taxpayer identification number (or employer identification number).
You must not be deducting more than $3,000 of dependent care benefits, or $6,000 if you had two or more qualifying dependents.

For more guidance on figuring and claiming the Child and Dependent Care Credit, see IRS 2022 Publication 503.

State tax credits are offered in some states as a modified version of the federal Child and Dependent Care Credit. Visit the Tax Credits for Workers and Their Families’ (TCWF) interactive map to learn what credits your state may offer.

If you don’t qualify for these credits or tax deductions, then consider other payment options for senior living, like life insurance, long-term care insurance, Medicaid, and other private and public options. Should your loved one need more advanced care in the future, you may find some peace in knowing that there are tax deductions available for memory care, as well. By reaching out to one of our Senior Care Advisors, you can get free advice on affordable senior living and payment options that fit your budget.

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References

ElderLawAnswers. (2021, March 17). Deducting medical expenses from your taxes.
Internal Revenue Service (IRS). (2023, February 6). Publication 502 Medical and Dental Expenses.
ElderLawAnswers. (2022, December 9). Tax deductions for assisted living costs.
Internal Revenue Service (IRS). (2022, December 9). Publication 501 Dependents, Standard Deduction, and Filing Information.
Internal Revenue Service (IRS). (2022, December 22). Publication 503 Child and Dependent Care Expenses.

Meet the Author

Grace Styron

Grace Styron is a writer at OurParents specializing in assistive technology, memory care, and home care. Before writing about healthy aging, she worked for an online women’s lifestyle magazine and as a grant writer for a nonprofit regenerative permaculture farm in Virginia. She earned her bachelor’s degree from Missouri State University.

Edited byDanny Szlauderbach

Reviewed byDenise Lettau

The information contained in this article is for informational purposes only and is not intended to constitute medical, legal or financial advice or create a professional relationship between A Place for Mom (of which OurParents is a trademark) and the reader. Always seek the advice of your health care provider, attorney or financial advisor with respect to any particular matter and do not act or refrain from acting on the basis of anything you have read on this site. Links to third-party websites are only for the convenience of the reader; A Place for Mom does not recommend or endorse the contents of the third-party sites.

Is Assisted Living Tax Deductible?