Peggy James CPA
  • Written By
    Peggy James, CPA

    Peggy James, CPA

    Independent Accountant and Financial Coach

    Peggy James is a certified public accountant with a Master of Accounting. She has spent the past several years of her career focused on working in higher education finance roles. Peggy also has accounting and finance experience working in the corporate and nonprofit sectors.

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  • Edited By Michael Santiago
  • Published: June 12, 2023
  • 3 min read time
  • This page features 1 Cited Research Article
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APA James, P. (2023, June 14). Tax Breaks and Deductions for Senior Living Residents. Annuity.org. Retrieved May 28, 2024, from https://dev.annuity.org/2023/06/12/tax-breaks-and-deductions-for-senior-living-residents/

MLA James, Peggy. "Tax Breaks and Deductions for Senior Living Residents." Annuity.org, 14 Jun 2023, https://dev.annuity.org/2023/06/12/tax-breaks-and-deductions-for-senior-living-residents/.

Chicago James, Peggy. "Tax Breaks and Deductions for Senior Living Residents." Annuity.org. Last modified June 14, 2023. https://dev.annuity.org/2023/06/12/tax-breaks-and-deductions-for-senior-living-residents/.

When it comes to tax deductions, any expenses related to living in a senior living community can only be deducted if they are related to medical care. However, it is important to keep in mind that there are high thresholds that must be met before any medical expenses can be deducted.

Are Medical and Dental Expenses Tax Deductible?

Medical and dental expenses are tax deductible, but it’s important to understand the key points involved in claiming a deduction on your taxes.

Under the tax code, individuals can only deduct medical and dental expenses that exceed 7.5% of their adjusted gross income (AGI). For instance, if an individual’s AGI is $50,000 and their qualifying medical expenses for the year total $10,000, only $6,250 of medical expenses would be deductible.

Moreover, individuals can only claim a tax deduction for medical and dental expenses if they choose to itemize deductions instead of taking the standard deduction. Therefore, it is only worth pursuing this deduction if the individual has enough expenses to itemize.

For the tax year 2023, a married couple filing jointly can claim a standard deduction of $27,700. If one spouse is 65 years or older, the standard deduction increases to $29,200. If both spouses are at least 65 years old, the standard deduction increases to $30,700. Thus, to claim a deduction for qualifying medical expenses, the individual would need to have at least $27,700 in itemized deductions (or more, depending on their age.)

What Medical Expenses Qualify for Tax Deduction?

Although some medical expenses may be tax deductible, the IRS has specific rules and limitations regarding what qualifies for a deduction.

According to the IRS, expenses for nursing homes can be considered deductible medical expenses, including the cost of meals and lodging, if the primary reason for being there is medical in nature. However, the cost of meals and lodging in a senior living facility is generally not deductible unless the individual is receiving medical care, and only the expenses related to medical care would be eligible for deduction.

Additionally, the IRS considers home care services as a deductible medical expense, as stated in Publication 502. It specifies that payments made for nursing services, including wages, can be included in medical expenses if they are typically performed by a nurse and are related to the patient’s medical condition. Examples include administering medication, changing dressings, bathing and grooming. These services can be provided in the patient’s home or in a care facility.

The following are qualifying medical expenses that may be relevant to seniors, according to the IRS:

  • Medicare Part B and D insurance premiums
  • Long-term care insurance premiums (subject to limitations)
  • Doctor visots
  • Prescription medications
  • Durable medical equipment prescribed by a doctor (such as eyeglasses)
  • Wheelchairs

Are Medically Related Home Improvements Tax Deductible?

Seniors who age in place in their own homes can claim the cost of home improvements made to accommodate a medical condition or disability as qualifying medical expenses, according to the IRS. Examples of such improvements include:

  • Building wheelchair ramps
  • Widening entrance or exit doorways to accommodate wheelchairs or other assistive devices
  • Installing handrails or grab bars
  • Modifying bathrooms by adding railings or support bars

When it comes to taxes, there is a caveat to claiming the cost of home improvements made to accommodate a medical condition or disability as a qualified medical expense. The deduction is only allowed for the amount that exceeds the increased value of the home resulting from the improvements. For instance, if the cost of qualifying improvements is $25,000 and the added value to the home is $15,000, only $10,000 can be deducted as a qualified medical expense.

In conclusion, seniors who choose to age in place and need medically-related home improvements or medical expenses may qualify for tax breaks and deductions. It is crucial to understand the requirements for deductible expenses and the process to claim them on your tax return. By careful planning and documentation, seniors can potentially save on their taxes while receiving the essential care required to age comfortably and securely in their homes.

Please seek the advice of a qualified professional before making financial decisions.
Last Modified: June 14, 2023

1 Cited Research Article

Annuity.org writers adhere to strict sourcing guidelines and use only credible sources of information, including authoritative financial publications, academic organizations, peer-reviewed journals, highly regarded nonprofit organizations, government reports, court records and interviews with qualified experts. You can read more about our commitment to accuracy, fairness and transparency in our editorial guidelines.

  1. Publication 502. (2022). Medical and Dental Expenses. Internal Revenue Service. Retrieved from https://www.irs.gov/publications/p502