Fact: A private one-bedroom space in an assisted living community cost $5,350 a month on average in the United States in 2023, according to global data intelligence platform Statista.com. If you’re a caregiver — or a senior — looking at paying for assisted living, you’re justified in wondering, “Is assisted living tax deductible?”
Seniors and families: we understand. Assisted living costs can be confusing, but they don’t have to if you plan right.
But don’t worry, because the short answer to your question is yes. Assisted living is tax deductible, and we’re here to explain why.
At Village Walk, our goal is to provide you with exceptional assisted living care and resources to ensure you live your most vibrant life well into your golden years.
In this article, our senior living advisors draw on their 30+ years of experience to help unpack the many questions around assisted living expenses and their tax implications.
Join us as we answer the question, “Is assisted living tax deductible?”
How the internal revenue service (IRS) categorizes assisted living
Before diving into whether assisted living is tax deductible, we’ll want to know more about the organization that works with assisted living tax deductions: the Internal Revenue Service (IRS).
The IRS considers assisted living as a form of tax-deductible long-term care when certain conditions are met. When those conditions are met, the costs of select medical expenses are tax deductible.
Specifically, if an assisted living resident needs help with basic activities of daily living (ADL) — such as bathing, dressing, or eating — the IRS may classify assisted living expenses as medical costs.
What’s more, if a doctor certifies that a resident has a chronic illness, services provided in assisted living can fall under the umbrella term of tax-deductible medical care. But, not all costs associated with assisted living are eligible for tax deductions, so you’ll want to understand which assisted living and memory care expenses are tax deductible — and which aren’t.
Assisted living expenses that are (and aren’t) tax deductible
To start, assisted living expenses related to personal care — including services such as help with daily activities or medical support — may qualify as tax-deductible medical expenses. To be eligible for deductions, the medical expenses must exceed 7.5% of a person’s adjusted gross income (AGI).
Senior living expenses like room and board are generally not tax deductible. Unless a resident chooses to live in an assisted living or memory care community where the community’s facility exists to provide the bulk of the person’s medical care, living fees associated with these communities tend not to be tax deductible.
Unsure of whether your expenses would qualify for a deduction? We recommend reaching out to one of our senior living advisors or consulting with a tax professional to understand which medical expenses can be written off for tax purposes.
Parents’ assisted living expenses that are tax-deductible
But perhaps you’re not the one receiving assisted living care.
If you’re paying for your parent’s assisted living, you may be able to claim your parents’ expenses as a tax deduction. To ensure assisted living expenses are tax deductible:
- Your parent must be considered a dependent as defined by IRS rules.
- The care your parents receive must be medically necessary. A licensed healthcare provider is responsible for deeming whether your parent’s condition is defined as “medically necessary.”
Furthermore, you’ll also need to keep detailed records of expenses and ensure your expenses exceed the 7.5% AGI threshold.
For tax preparation purposes, taking the time to organize receipts and medical certifications can help ensure you maximize your chance of receiving the most amount of eligible deductions possible.
Did you know?
Did you know that aging in place can be more expensive than moving to a senior living community?
- Modifying your home
- Hiring a caregiver
- Getting help with day-to-day chores.
All these home-care expenses add up.
To learn more about what senior living looks like in a community — a community where caregivers meet you where you are, love you for who you are, and help you be who you are — take a look at what’s happening in our little Village.
How to deduct assisted living expenses
If you follow the IRS’ guidelines, deducting assisted living expenses is very simple. To determine the tax deductibility of assisted living, follow these three easy steps.
- Total all qualifying medical expenses for the year, including assisted living costs.
- Ensure these costs exceed 7.5% of your adjusted gross income (AGI).
- When filing your taxes, use Schedule A (Form 1040) to itemize these deductions.
To avoid any tax issues, make sure you’ve gathered all relevant receipts, bills, and doctor’s statements to ensure your records are accurate and complete.
Of course, if you’re unsure about any part of the process, we recommend consulting with a tax advisor to ensure all your t’s are crossed and your i’s are dotted.
How to calculate tax deductions for assisted living expenses
Calculating tax deductions for assisted living expenses involves careful attention to total medical costs and adjusted gross income (AGI). To deduct the medical portion of your AGI, you’ll want to identify which assisted living services qualify as deductible medical expenses.
Expenses like personal care or medical supervision often fall under the category of deductible medical expenses.
Once you have your total medical costs, subtract 7.5% of your AGI from that number. And voila! The remaining amount is your potential deduction.
To avoid errors in calculations, we always recommended tracking all expenses throughout the year and consulting a tax professional for accurate reporting.
Table: Common assisted living expenses that are tax deductible
| Medical services that are tax deductible | Non-medical tax deductible expenses |
| 1. Medications needed 2. Help with activities of daily living such as bathing, dressing, grooming, continence, transferring from one area to another, and meal preparation 3. On- and off-site therapies such as physical therapy, occupational therapy, and more 4. Transportation-related to medical care | 1. Equipment that will be used over many years (it may only be deducted in the tax year it was purchased) 2. Laboratory-related fees 3. X-rays 4. Wheelchairs 5. Select service-provider fees |
Assisted living expenses are tax deductible — but it depends
In short, most assisted living expenses that are tax deductible include the following:
- Medications
- Therapies
- Help with activities of daily living
- Transportation to and from a location to a medical care site
However, only medical expenses that are more than 7.5 percent of a person’s adjusted gross income (AGI) are able to qualify for the medical deduction, according to the Internal Revenue Service (IRS).
Assisted living expenses that aren’t eligible for deduction include room and board, meals, and other activities. You’ll want to reach out to a senior care professional or tax advisor to know the details of each.
You can always reach out to a Village Walk senior care concierge staff for help navigating the tax deductibility of certain expenses. Our expert advice comes at no cost to you, and we’ll always provide you with resources that lead you in the right direction.
To schedule your one-on-one introductory chat and learn more about what assisted living can do for you and/or your loved one, contact us today. We’re open 24/7, 365 days a year.
We look forward to finding you the right answers for all your questions.
Frequently asked questions about assisted living tax deductions
Is assisted living a tax-deductible expense?
Yes! Assisted living can be a tax-deductible expense, but only if the care provided is medically necessary. Medical expenses must exceed 7.5% of the resident’s adjusted gross income to qualify for a deduction.
Are memory care expenses tax deductible?
Memory care expenses are tax deductible as they often involve medically necessary supervision and personal care for individuals with Alzheimer’s or lewy body dementia. A physician’s certification is often required to validate the medical need for this level of care.
Can a caregiver receive a tax deduction on assisted living expenses?
A caregiver can claim a tax deduction on assisted living expenses for a dependent parent or spouse, as long as the care is medically necessary. The caregiver must also meet IRS guidelines for claiming the dependent on their tax return.
“The experience we’ve had has been better than 5 stars.”
My dad became an assisted living resident at Village Walk a month ago. From a daughter’s perspective, the experience we’ve had with VW has been better than 5 stars.
All of the staff at VW maintain a focus on creating a community and servicing that community with kindness and compassion, while maintaining the highest standards of care. From our first meeting with Nicole Vulpis, Director of Sales and Marketing, to every subsequent interaction with VW staff, we felt Dad’s needs were heard, understood, and met with caring and concern.
At the same time, they didn’t interfere with his independence. Dad’s days are now filled with good food, fun and engaging activities, and being part of a vibrant community. It doesn’t get better than that.
When I asked Dad what rating he would give VW, he didn’t hesitate to say 5 stars.” – Faith S., grateful Village Walk family member.
