Can the Expense of a Nursing Home be Taken as a Deduction on Your Taxes?

(5/21/13)- A recent report from Genworth Financial, an insurance provider in Waltham, Mass., estimates that the national medial daily cost of a private room in a nursing home is $230 per day, an increase of 3.6% over 2012.

The average cost for a shared room is $203 per day. In a city such as New York, that rate is roughly 50% higher.

(12/27/04)-Glenn Ruffenach, writing an article entitled "Extending a Hand" in the Wall Street Journal deals with the issue of using as a medical expense the costs of a nursing home that you incur if you pay the nursing home bill for a dependent.

Most of us know that we can deduct our own medical expenses, if you itemize deductions on your return, as long as they exceed 7.5% of you adjusted gross income. According to Randy Gross, a professor and director of financial-planning program at the University of Missouri, in Kansas City you can use it as a medical deduction as long as you meet the requirements set by the Internal Revenue Service.

The article goes on to quote from Jeffrey Kelson, a partner in BDO Seidman LLP's tax-service practice in New York who stated, "I always like to call this an 'overlooked' deduction, because it's not something you hear about at cocktail parties."

One of the first hurdles that you must clear in order to be able to take this deduction is that you must provide more than half the support for the care recipient. The requirement that the care recipient must have a gross income of less than $3,100, and must not have filed a joint return does not apply if you are using the recipient as a deduction.

Carol I Katz, a CPA and deputy tax director for Leonard J. Miller & Associates in Baltimore says in the article,

"that a percentage of both the entry fee and monthly fee for nursing homes and other long-term care facilities typically are identified by the facilities' administrators as medical expenses. She gives the example of a caregiver paying $150,000 for room in a nursing home for an elderly parent. If one-third of that entry cost is allocated for medical fees, then $50,000 could go toward the caregiver's total medical expenses when calculating his or her return.

What's more, if the care recipient reaches the point in long-term care where he or she needs help with two or more 'activities of daily living' (like bathing and taking medication) or becomes bed ridden, 'then the entire monthly bill could become a medical expense."

The article goes on to point out two caveats in this matter. The payment must be made by you directly to the medical provider and not to you relative. Secondly because of the alternative minimum tax, medical expenses must exceed 10% of your adjusted gross income, rather than 7.5% of your adjusted gross income, in order to be able to take some of the expense.



By Allan Rubin
updated May 21, 2013

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