are long term care expenses tax deductible
In one decision, the court ruled that payments to non-medical caregivers are still deductible as medical expenses; in the other, the court held that a written agreement is required in order for a deceased woman's estate to deduct more than $1 million in care that her son allegedly provided her. Mr. Olivo filed a tax return for the estate and claimed a deduction of $1.24 million as a debt he said the estate owed him for the care he had provided his mother over the years. He claimed he had an oral agreement with his mother that after she died she would compensate him for his services. She may be able to deduct those costs if they aren't covered by insurance. Qualified long-term care expenses can be tax-deductible if they are for diagnostic, preventive, treatment or rehabilitative services, or for personal care required by someone who is chronically ill. These premiums -- what the policyholder pays the insurance company to keep the policy in force -- are deductible for the taxpayer, his or her spouse and other dependents as long as they exceed 10 percent. The expenses qualified as long-term care services even though the caregivers were not medical personnel because a doctor had found that the services provided to Ms. Baral were necessary due to her dementia. , March 26, 2007. Follow @Kiplinger. My 94-year-old mother had to move to assisted living (not a nursing home) last year because she was no longer able to care for herself. Her doctor certified she could not bathe, dress or feed herself due to dementia and loss of mobility. Your mother has to itemize to deduct medical expenses, and she can write off only the amount of those expenses that exceeds 7.5% of her adjusted gross income. But for retirees with low incomes, this threshold can be easy to cross. (The 2014 limit was also $330.). The Georgetown University Long-Term Care Financing Project has a two-page fact sheet, Tax Code Treatment of Long-Term Care and Long-Term Care Insurance (May 2003). To download it in PDF format, go to: http://ltc.georgetown.edu/pdfs/taxcode.pdf. Premiums for qualified long-term care insurance policies (see explanation below) are tax deductible to the extent that they, along with other unreimbursed medical expenses (including Medicare premiums), exceed a certain percentage of the insured's adjusted gross income. Long-term care can be very expensive, but many long-term care expenses can be deducted from your taxes. Two important recent decisions by the U.S. Tax Court provide guidance on when caregiving services are deductible.
Yes