Tax Deductibility of Memory Care (from IRS Tax Publication 502)
The IRS allows a deduction for people who require “substantial supervision” to maintain their health and safety because of cognitive impairment. The resident’s medical condition determines qualification for a medical expense tax deduction. A “plan of care letter” from the resident’s physician is needed. Costs may be deductible by the resident or the person (adult child) paying for the resident’s care if the resident is a dependent of the person paying for the services. A person generally qualifies as your dependent for the purposes of medical expense deduction if:
• That person lived with you for the entire year as a member of your household or is related to you,
• That person was a U.S. citizen or resident, or a resident of Canada or Mexico for some part of the calendar year in which your tax year began, AND
• You provided over half of that person’s total support for the calendar year.
You can include the medical expenses of any person who is your dependent even if you cannot claim an exemption for him or her on your return.
Please consult a tax consultant for clarification on your situation. See IRS Publication 502 at www.irs.gov