Medical expense exclusion stays at 7.5%

Crushed

  The deduction floor has been 7.5 percent since 2017, a rule recently made permanent by the signing of the Consolidated Appropriations Act 2021 on December 27, 2020. 

https://www.forbes.com/sites/ashleaebeling/2020/12/22/medical-expense-deduction-tax-relief-is-big-win-for-seniors-in-year-end-spending-bill/?sh=57a907081b4d

This is of course of special importance to those paying for long term care.  DWs costs are in excess of 130,000  a year 

"For a nursing home or long-term care expense to be deductible, the care must be provided by a licensed health care practitioner for the treatment of a chronically ill patient. An individual is deemed to be chronically ill if his or her status is such that the person is unable to perform two or more normal activities of daily living, such as eating, bathing or dressing, for a period of ​90 days​ or more.  Dementia or another form of cognitive impairment meet this requirement as well, if the condition is such that supervision is required to maintain the person's health and safety."

  

Donr

Crushed, thank you for the information. Would this apply for the cost incurred by a company that provides an aide several times a week or more.

Crushed

From IRS publication 502

 You can include in medical expenses wages and other amounts you pay for nursing services. The services need not be performed by a nurse as long as the services are of a kind generally performed by a nurse. This includes serv-ices connected with caring for the patient's condition, such as giving medication or changing dressings, as well as bathing and grooming the patient. These services can be provided in your home or another care facility

  

 Qualified Long-Term Care Services Qualified long-term care services are necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, rehabilitative services, and maintenance and personal care services (defined later) that are:

  

 1.Required by a chronically ill individual, and2.Provided pursuant to a plan of care prescribed by a licensed health care practitioner.Chronically ill individual.An individual is chronically ill if, within the previous 12 months, a licensed health care practitioner has certified that the individual meets either of the following descriptions.

  

 1.He or she is unable to perform at least two activities of daily living without substantial assistance from an-other individual for at least 90 days, due to a loss of functional capacity. Activities of daily living are eating, toileting, transferring, bathing, dressing, and continence.

  

 2.He or she requires substantial supervision to be protected from threats to health and safety due to severe cognitive impairment.

 Maintenance and personal care services.

 Maintenance or personal care services is care which has as its primary purpose the providing of a chronically ill individual with needed assistance with his or her disabilities (including protection from threats to health and safety due to severe cognitive impairment)
 
 So you need a plan of care that says the person with dementia needs supervision.  Most agencies can and will prepare this.

ElaineD

Thank you, Crushed.  Your presence and your information are priceless.  We're not there yet, but who knows when or why we will need this information.

Elaine

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Crushed

Then, in the late 2017 lead-up to passing the Tax Cuts and Jobs Act, the Republican-led House of Representatives proposed eliminating the medical expense tax deduction.

 https://www.coredocuments.com/history-of-the-medical-expense-tax-deduction/

Yes we fought like mad to preserve the medical deduction Thanks for pointing that out

 

Republican tax plan to get rid of medical expense deduction, used by older, disabled and sick Americans

Published: Nov. 16, 2017 at 9:42 a.m. ET

https://www.marketwatch.com/story/gop-tax-plan-to-get-rid-of-medical-expense-deduction-used-by-older-disabled-and-sick-americans-2017-11-03#