Long Term Care

[MGC94]

I have two questions regarding the deductibility of long-term care expenses for taxpayers with dementia and would appreciate any help

Question 1:
A taxpayer with dementia resides in a nursing home and pays out-of-pocket total annual costs of $68,460. Of that amount, $20,538 is specifically identified as medical care.

Given that the primary reason for placement is dementia, would the full $68,460 (including meals and lodging) be deductible as a medical expense? Or is the deduction limited to the explicitly stated medical care portion of $20,538?

I am reviewing IRS Publication 502, which indicates that if a taxpayer is in a nursing home primarily for medical care, the entire cost (including meals and lodging) may qualify as a medical expense. I would appreciate confirmation on how this applies in this situation.

Question 2:
A separate taxpayer with dementia is married filing jointly. The spouse receives 1/2 of the taxpayer’s pension and none of the Social Security benefits. The taxpayer’s Social Security and remaining pension income are used toward nursing home costs, and an additional $23,746 is paid out-of-pocket from the taxpayer’s trust.

The spouse reports and pays tax on the full pension and Social Security income.

In this situation, can any portion of the pension (including the half paid to the spouse) and/or the full Social Security benefits be treated as deductible medical expenses related to the taxpayer’s long-term care? Or would only the actual out-of-pocket payments (such as the $23,746) qualify for the medical deduction?

Thank you for your help

[strongsilence]

1. Is there a physician certification or plan of care prescribed by a physician?

[Norman2001]

For Q1, that's how I interpret it. The full amount paid is deductible. If your client doesn't have a supporting statement from their physcian, you might suggest that they get one in case they are ever audited. 

For Q2, I believe that only the actual amount paid is deductible. 

[IntuitAmyC2]

1. Yes. The IRS offers this example showing it as deductible based on Pub 502 need for qualified long term care.

2. The IRS focuses on the amount paid rather than the source. Actual medical expenses should be deducted.

I have been audited over medical expenses and they just wanted receipts, proof of payment.