Maximizing Tax Benefits in Assisted Senior Living
The Office of Assistant Secretary for Planning and Evaluation says that over 50% of adults have severe disabilities once they reach 65 years. They often need paid long-term services and support, including home care and assisted living.
While assisted senior living allows older adults to live safer and more comfortably, it can be costly. Maximizing tax benefits will help you or your loved one lower the cost of care. It reduces financial strain that can lead to stress, and seniors will live a high-quality life as they age.
Here, we'll explore:
- Elderly tax benefits available in Inverness, FL
- How to maximize them
- How to qualify for tax benefits for seniors
Whether caring for aging loved ones or planning for your long-term needs, you need detailed info to make informed decisions. Continue reading to learn more about tax benefits available to seniors.
Senior Living Tax Benefits in Inverness
Tax benefits for seniors usually cover medical expenses, but not every cost is eligible. Here are the credits and primary deductions that may apply:
- Medical expense deductions
- Dependent Care Tax Credit
- Long-term care insurance premiums
The IRS lets taxpayers deduct medical expenses paid for yourself, a spouse, or a dependent. However, they must exceed 7.5% of your adjusted gross income (AGI). While there isn't a specific deduction for assisted living, you can still cut costs by factoring in the medical aspect of care.
Deduct expenses such as:
- Personal care services
- Medical equipment
- Caregiver assistance
If you are paying for the care of a spouse, you may use the Dependent Care Tax Credit. However, you have to meet several conditions to be eligible.
For example, you must be paying for their care to be able to go to work or find a job. Likewise, you must have lived in the US for over half the year you claim a deduction.
Long-term insurance allows you to cut some assisted living costs, like help with personal care. Some policies may also cover memory care, housekeeping, and laundry services. A portion of the premiums you pay for long-term care insurance will be tax deductible based on IRS policies.
Other Tax Benefits for Seniors You Should Know About
Apart from the above deductions, there are other lesser-known tax benefits for seniors that you could use based on your situation. These include:
- State level deductions
- Home sale exclusion
- Veteran's benefits
Florida offers seniors who have had their home for over 25 years an additional tax deduction not exceeding $50,000. The property's value must be less than $250,000, and the senior must be 65 or older. Paying less on property taxes means having more funds available for senior housing.
If your loved one sells their home to move into an assisted living community, they could enjoy more tax benefits. Florida doesn't tax the first $250,000 in profits from a home sale. If your loved one is married and files their returns jointly, they won't pay tax for the first $500,000.
The Department of Veterans Affairs gives retired and honorably discharged vets a tax-free pension. If your loved one served in the military and was discharged honorably or retired, you can use these funds to cater for assisted living costs.
How to Maximize Tax Benefits in Assisted Senior Living
The IRS will need evidence that you spent the amount you deducted when filing your taxes. Have detailed records of all medical expenses related to your loved one's care. Have receipts or invoices for the fees you paid to an assisted living community to care for their health needs.
If you support your aging parents, you can claim them as a dependent on your tax return. But, their gross income in 2023 must be less than $4,700 based on a post by Turbo Tax. These rates change with time, so it's always good to confirm every year before claiming a deduction.
But before claiming your parents as a dependent, ensure that you pay more than half of their expenses because it's also vital for eligibility.
A health savings account (HSA) can cover long-term care expenses while letting you enjoy tax deductions. Confirm how much you can deduct for the premiums your loved one pays based on their age.
For example, if they are over 70 and single, they may qualify for up to $5,880 in 2024. On the other hand, married ones can enjoy deductions of up to $11,760, according to the American Association for Long-Term Care Insurance.
How to Qualify for Tax Benefits in Senior Living
After learning about various tax benefits and ways to maximize them, you may wonder how to ensure your loved one qualifies.
The IRS considers specific services offered in assisted living eligible for medical deduction. If your loved one is in senior housing, mainly because of their declining health, you will qualify for tax benefits.
Non-medical services such as help with dressing, bathing, and eating can also qualify for deduction. But, you can only claim tax benefits if your loved one needs them due to a chronic health condition or disability.
Sometimes, the IRS may need you to prove that the services provided in the assisted living community are vital for your loved one's well-being. In such a case, you will need a medical file detailing their health condition and the care required.
Navigating tax benefits in assisted senior living can be tricky since the policies change frequently. Some are only available to specific categories, so it's always important to look into eligibility before applying.
Consulting a senior living professional can give you more insights into tax benefits and let you maximize them. It helps you make smart decisions and ensures you don't claim false deductions that could lead to IRS penalties.
Find Quality Assisted Living Services in Inverness
Tax benefits help you cut the cost of aging parents' care while ensuring they get quality services. At Highland Place, we provide professional assisted living services in Inverness, FL.
Our community has modern features and prioritizes the safety and comfort of seniors. We also have engaging activities and wellness programs to help them stay healthy. Contact us today for more senior wellness info.