| While it is always recommend to consult your own | | | | threats to health and safety due to severe cognitive |
| income tax advisor for clarification about your | | | | impairment; or (3) having a similar level of disability as |
| personal situation, many assisted living expenses may | | | | determined by future regulations to be published by |
| be potential tax deductions. | | | | the Secretary of the Treasury. |
| In fact, many of the residents at our assisted living | | | | Individuals with cognitive impairments such as |
| communities (The Palace Renaissance & Royale | | | | Alzheimer’s disease, but who are physically able, |
| in Kendall and The Palace Gardens in Homestead), | | | | should be treated in the same manner as an individual |
| and our skilled nursing facility (The Palace Nursing | | | | who is unable to perform—without substantial |
| & Rehabilitation Center in Kendall) have had a | | | | assistance—at least two ADLs. Under these |
| reduction in their income taxes as a result of their | | | | criteria, many residents of assisted living communities |
| move to our community. | | | | would qualify for this deduction. |
| Monte S. Gordon, a certified public accountant (CPA) | | | | “To qualify for the deduction, personal care |
| and tax partner at Coral Gables-based Berenfeld | | | | services must be provided according to a plan of |
| Spritzer Shechter & Sheer, LLP, works closely | | | | care prescribed by a licensed health care |
| with many of the residents and families at The | | | | provider,” explained Gordon. “A doctor, nurse |
| Palace’s communities (asisted living in Miami) | | | | or social worker must prepare a plan that outlines the |
| advises that medical expenses, including some | | | | specific daily services the resident will receive.” |
| long-term care expenses, are deductible if the | | | | He believes that 100 percent of the monthly |
| expenses are more than 7.5 percent of the | | | | payment (room and board) paid by the residents of |
| residents’ adjusted gross income. | | | | most assisted living communities and skilled nursing |
| The most common types of medical expenses are | | | | facilities should be deductible as qualified long-term |
| those paid by medical insurance: doctors, dentists, | | | | medical care services, despite the fact that the |
| hospitals and prescription drugs. The definition of a | | | | monthly fee covers a variety of services. |
| “medical expense” has also been expanded | | | | In some circumstances, adult children may also get a |
| to include “qualified long-term care services” | | | | tax deduction if their parents or other immediate |
| such as those needed for necessary diagnostic, | | | | family members (including in-laws) live at an assisted |
| preventative, therapeutic, curing, treating, mitigating | | | | living community and qualify as their dependents. |
| and rehabilitative services. | | | | The family member must be a U.S. citizen or legal |
| “Maintenance or personal care services that are | | | | resident or resident of Canada or Mexico and the |
| required by a chronically ill individual and that are | | | | adult child must provide more than half of the family |
| provided part of a plan of care prescribed by a | | | | member’s total support for the year. |
| licensed health care practitioner are included as | | | | Additionally, the adult child may still be eligible for a |
| well,” said Gordon. “The primary purpose of | | | | deduction if he or she contributes to the family |
| maintenance or personal care services is to provide | | | | member’s support according to a “multiple |
| needed assistance to a chronically ill individual whose | | | | support agreement”. They must pay more than |
| health and safety is threatened due to severe | | | | 10 percent of the qualifying resident’s total |
| cognitive impairment.” | | | | support for the year, and, with others who also |
| In order to benefit from the deduction, the | | | | support the resident, collectively contribute to more |
| chronically ill individual must have been certified within | | | | than half of the support. |
| the previous 12 months as (1) being unable to | | | | This may give you food for thought, but tax rules |
| perform (without substantial assistance) at least two | | | | can be very complex. It’s important to consult a |
| activities of daily living (ADL) such as bathing, eating, | | | | tax attorney or accountant versed in eldercare tax |
| dressing, etc., for at least 90 days (in the future) due | | | | issues about your specific situation before finalizing |
| to a loss of functional capacity; or (2) requiring | | | | your taxes. |
| substantial supervision to protect such individual from | | | | |