Tough Choices: Having ailing parents is heartbreaking. Sometimes, you have no choice put to place your mother or father into a nursing home. It's hard enough to deal with this issue without having to make sure your finances are in order. But you need to stay one step ahead of the game if you want to avoid IRS troubles.
Nursing Home FAQS: People have often asked me questions about Nursing Homes. I thought I'd use my knowledge as a former IRS Hit-man to share these with you.
Who is a Qualifying Relative for my Tax Deductions?
The IRS considers the following to be qualifying relatives (from IRS Publication 502):
- Son, daughter, stepchild, foster child, or grandchild
- Brother, sister, or neice/nephew
- Father, mother, or an ancestor or aunt/uncle
- Stepbrother, stepsister, stepfather, stepmother, son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law
- Any other person (other than your spouse) who lived with you for the whole year as a member of your household
My relative is in a nursing home. I pay for the entire cost. Can I deduct the expenses on my tax return?
Maybe. This will depend on a few factors. In most cases, nursing home expenses are allowable as mecial expenses. If the main reason they are in the nursing home is for medical care then the entire cost is tax deductible. This includes meals, lodging, and medical expense. If the person is in the home for personal reasons, then the cost of medical care, meals, and lodging are not deductible. So make sure to prove they are in the nursing home for medical reasons. Save the hospital records and doctor notes!
Now You Have The Smoking Gun...Use it!
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