can a son get a tax deduction for paying my dad's memory care costs?

JohnGiver

Hello. My family is planning to continue paying my father's memory care facility costs in a year when his long term care insurance is exhausted. He has later stage vascular dementia, is 89 and his medical condition was well defined when he qualified to receive his LTC benefits from John Hancock. 

I'm planning to have my mother, brother and myself each pay about 1/3 of dad's monthly memory care costs. We would write the checks directly to the memory care facility. 

I'm not asking how this affects my taxes, as that's unique to the tax payor. My question is more general and is whether the payments to the memory care facility paid by my brother and I may be eligible under IRS rules as a qualified medical expense? 

I'll have my CPA research this of course, but wanted to see if anyone could offer advice on best practices and/or the viability of this qualification. 

Thanks 

harshedbuzz

Tax Deductions for Alzheimer's Care | AgeRight Blog

King Boo

Glad you have the CPA because this can be complicated!   I think, but am not sure, that father would have to be someone's dependent.  So, you may all need to figure out how one person is providing 50% or more of their support-but of course, your CPA will have the answer.

Sometimes, CPA's come up short  because their clientele don't have this issue often.  To my great surprise, although we have a CPA, I had to re-direct about facts about a Roth conversion (none of his clients had done one) and deductions for a 529 plan (ditto!).  He was more small business oriented..........

A Certified Elder Law Attorney (CELA) www.nelf.org, can also be a tremendous help with knowledge in this area, that is specific to your state and situation.   While their fees tend to run $450 up an hour depending on area, they saved us a lot.     

I am sure you have considered long term care placement in a skilled nursing home but for other reasons are keeping him in Memory Care.  If your facility has an affiliated nursing home, many will accept a long time resident who has spent thousands over the years into their nursing home on Medicaid.   Or, perhaps there is another local snf that you have visited and ranked that accepts Medicaid.

Either way, it pays to know your first, second and third choice of a nursing home because virtually everyone needs one for a short term rehab stay after a hospitalization.  It can be more productive if you know if they take Medicaid and are a good facility, avoids moving to another which can be hard.    Having some private pay 'key money' can be helpful at times, to expand your choices, if you can strategize this.  

Sometimes, a label of snf is not that different from MC, depending on the facility.  Anecdotally, when my LO's care/supervision needs increased, moving to the snf increased supervision significantly, medical care a lot (of course the price tag went up on private pay but if we ran out they would take Medicaid).   And because it was a different wing, his old caregivers could stop by and say hello to ease the transition.   Early in the transition, Dad somehow headed out with his walker and made the long walk down the hall to his old dining room.  The lovely staff just rolled with it - made him comfortable in his old seat, served him, called the wing to let him know he was here having lunch, escorted him back, and told him "this is a new dining room, I will come eat with you here tomorrow!" said his old caregiver.  And did just that.

I cried when I learned of this, it was so kind.     I mention this tale only in the event that your Dad is eligible for a nursing home.  We tend to dread this day but sometimes it is just a label and an appropriate life continues on for them.

It's great that you all plan to continue to pay for his LTC; just be careful it does not compromise your own retirement because there may be other satisfactory options.

Do come back and let us know what your CPA says.   Good luck.

Ginsamae

According to the IRS - you can deduct medical expenses you paid for your dependent provided the person was your dependent either at the time the medical services were performed or at the time you paid the expenses. A person generally qualifies as a dependent if BOTH of the following requirements are met:

the person was a qualifying child or qualifying relative, and, the person was a US Citizen or national, or a resident of the US, Canada, or Mexico.

To be considered a dependent, you must provide more than 50% of the support of the person for the year. If the dependent received more than $4,300 in income, filed a joint return, or could be claimed as a dependent on another person's return then that person cannot be considered your dependent.

Keep in mind that the 'dependents' income must be considered in the equation as to whether you provide more than 50% of his/her support...if other siblings also provide support for the parent then that has to be factored in as well.

You are wise to be seeking the services of a tax professional. I've seen too many instances in my career of people taking the tax advice of friends/family (none of whom are tax professionals) and then seek out my services once they've received a tax notice from IRS for deficiencies because of said "advice."

JJ401

Check out form 2120 — multiple support agreements

Sometimes no one provided more than half the support of a person. Multiple support means that two or more people who could claim the person as a dependent (except for the support test) together provide more than half the dependent’s support. In this situation, the individuals who provide more than 10% of the person’s total support, and who meet the other tests for a qualifying relative, can agree that one of them will claim the person as a dependent for any applicable tax benefits.

https://apps.irs.gov/app/vita/content/globalmedia/4491_dependency_exemptions.pdf

My advice would be to use a CPA, not a tax service, if you go this route.