If your parent has received a dementia diagnosis, you may be wondering about the cost of memory care, especially if you’re going to help pay for it. The good news is that you may be able to deduct some of the expenses you’ve paid for on your taxes. Keep this in mind as you consider whether — and when — your parent might move into a memory care community. After you determine that your expenses qualify under the IRS’s guidelines, the amount you can deduct will vary depending on your adjusted gross income and which memory care expenses are deductible.

Key Takeaways

Yes, if you’re helping a parent pay for memory care, you may be able to deduct some of those costs on your own taxes. Your parent must meet the IRS’s definition of a chronically ill individual.
The amount you can deduct will vary based on your adjusted gross income (AGI). The first 7.5% of medical expenses aren’t deductible.
Keeping an itemized list of care services is important for claiming the medical tax deduction. Services must be part of a care plan to qualify.
You can claim a parent or qualifying relative’s expenses on your taxes if certain conditions are met. Typically, you must claim them as a dependent and pay for a significant portion of their care.

How does the medical tax deduction work?

The medical tax deduction allows you to deduct qualifying medical expenses, which includes long-term care costs for a parent. For long-term care to qualify, your parent would need to fall under the IRS’s definition of a chronically ill person. If they’ve received a diagnosis of Alzheimer’s or another form of dementia from their doctor and require supervision to maintain their health and safety, they’re considered chronically ill.^[01]

It’s important to note that memory care costs may just be one part of your medical expenses for the year. Other medical expenses, including hospitalizations, prescription medications, and equipment such as wheelchairs, are also deductible. You can find a full list of qualifying medical expenses in Publication 502 from the IRS. If you’re unsure whether an expense qualifies, it’s best to consult a tax professional.

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How much of memory care is tax deductible?

You’ll want to keep track of your parent’s memory-care-related medical expenses as you prepare your taxes, because the deductible amount is based on your adjusted gross income (AGI). Only the amount that exceeds 7.5% of your AGI is deductible.^[01]

Here’s an example: If your AGI is $100,000 and you spend $20,000 on medical expenses, you can deduct $12,500. The first $7,500 isn’t deductible.

What are the requirements for claiming memory care expenses?

To claim the medical tax deduction, you’ll need an itemized list of expenses. If your loved one lives in a memory care community, take a close look at the bill. Some communities may break down the monthly payment, making it clear what portion was for a medical expense and what wasn’t.

If your loved one’s community doesn’t provide an itemized breakdown, you may need to ask for one. Only qualified long-term care services are deductible. Those services are defined under the following conditions:

Services must be required by the person who is chronically ill.
Services must be part of a care plan. ^[01]

The following services usually meet those requirements:

Diagnostic
Preventive
Therapeutic
Curing
Treating
Mitigating
Rehabilitative
Personal care ^[01]

Is room and board considered a deductible expense?

Sometimes. This may depend on a few factors, including how advanced your loved one’s memory loss is. The IRS typically doesn’t consider room and board to be a deductible medical expense if someone is living in a community for personal reasons.^[01] (Note that personal reasons typically mean that your loved one isn’t in a community strictly for medical reasons and receiving a nursing home level of care — they’ve chosen to move to a senior living community because it suits their lifestyle, but it isn’t yet medically necessary.)

If, however, your loved one has Alzheimer’s and lives in a nursing home primarily to receive medical care, then the entire cost can be deducted.^[02]

Depending on the community and your loved one’s care plan, this portion of their care may or may not be deductible. Consult with a tax professional or financial expert if you’re unsure.

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Are a parent’s or other relative’s medical expenses deductible?

Yes, you can claim medical expenses for dependent relatives in addition to the expenses for yourself, your spouse, and any dependent children. To qualify as a dependent, this person needs to be a U.S. citizen, national, or a resident of the U.S., Canada, or Mexico and be a qualifying relative.^[01]

To be a qualifying relative, you’ll need to have provided over half of their support. A qualifying relative can be related in the following ways:

Sibling, half sibling, or stepsibling
Parent, stepparent, or parent-in-law ^[01]

Another way to claim a relative’s medical expenses is if they were your dependent, or would have been considered your dependent, except that:

Their gross income was more than $4,400 in 2022
They filed a joint return for 2022
You or your spouse can be claimed as a dependent on someone else’s tax return ^[01]

Can reimbursed medical expenses count towards the deduction?

No. If a portion of your loved one’s memory care expenses was covered by insurance, including through a long-term care insurance policy, you cannot count them towards your medical expenses.^[01]

Next steps

Whether your loved one already receives memory care or you’re considering future needs for a family member with a recent diagnosis, it’s important to plan ahead. You’ll have a range of options to consider, from home care and home modifications to keep someone with memory loss safe at home, to memory care in a community that caters to those specialized needs. You may encounter a wide range of price points.

While a tax deduction can help your parent stretch their budget, it’s always nice to have expert assistance. Senior Care Advisors are available to talk to you about your parent’s unique situation. They’ll help you find care options near your parent’s location and within their budget, all at no cost to your family.

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References

Internal Revenue Service. (2023, February 6). Publication 502, Medical and Dental Expenses.
Internal Revenue Service. (2022, September 6). Medical, nursing home, special care expenses.

Meet the Author

Rebecca Schier-Akamelu

Rebecca Schier-Akamelu is a writer at OurParents. Her writing supports a person-centered approach to senior care and she’s written on a range of topics from home care to finances. She holds a certificate in digital media and marketing from Duke University and a bachelor’s degree from Creighton 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 Memory Care Tax Deductible?