Medical, Nursing Home, Special Care Expenses Internal Revenue Service

Table of Content

• Calculating Your Deduction for Total Medical Expenses
• Tax Deductions for Assisted Living Costs
• Differences between California and Federal Law
• Deduct A Dependent’s Medical Expense
• Use Tax
• Medicare, Medicaid, and Memory Care: Payment Options for Seniors and Families
• Tax Credits and Deductions for Caregivers

For these Governor-only declared disasters, subsequent state legislation is not required to activate the disaster loss provisions. Additional information can be found in the instructions for form FTB 3805V. See Schedule CA specific line instructions for more information. For more information, see R&TC Section and Schedule CA instructions.

Count the number of dependents listed and enter the total in the box on line 10. Multiply the number you entered by the pre-printed dollar amount and enter the result. When residents of memory care facilities live there, the percentage of costs that qualify as tax-deductible medical expenses is determined by itemized charges.

Calculating Your Deduction for Total Medical Expenses

However, in order for a caregiver to qualify for the deductions, the resident must meet all the requirements as a dependent under the IRS dependency exemption rules. If you are a spouse or relative of someone in an assisted living facility, nursing home, or rehabilitation center, claim them as a dependent. If you are seeking to deduct the costs of a nursing home or assisted living facility, you might be able to deduct anything that exceeds 7.5% of your income. To qualify for this tax break, expenses need to be itemized, and youre only allowed to deduct the amount of expenses that exceeds your adjusted gross income by 7.5%.

If you do not have an SSN because you are a nonresident or resident alien for federal tax purposes, and the Internal Revenue Service issued you an ITIN, enter the ITIN in the space for the SSN. An ITIN is a tax processing number issued by the IRS to foreign nationals and others who have a federal tax filing requirement and do not qualify for an SSN. It is a nine-digit number that always starts with the number 9. For purposes of California income tax, references to a spouse, husband, or wife also refer to a California RDP, unless otherwise specified. Student Loan Discharged Due to Closure of a For-Profit School – California law allows an income exclusion for an eligible individual who is granted a discharge of any student loan under specified conditions. Any other taxpayer filing an individual return with AGI of $250,000 or more for the taxable year in which the exchange begins.

Tax Deductions for Assisted Living Costs

The dependent can be a parent as long as you provide at least 50% of the parent’s support. For deducting medical expenses, you can deduct only the amount of your medical and dental expenses that is more than 10% of your adjusted gross income . Premiums for qualified long-term care insurance may be deductible if they exceed 7.5% of the insured’s AGI. If your child was required to file form FTB 3800, Tax Computation for Certain Children with Unearned Income, and your taxable income has changed, review your child’s tax return to see if you need to file an amended tax return.

RDPs filing as married/RDP filing separately, former RDPs filing single, and RDPs with RDP adjustments will use the California RDP Adjustments Worksheet in FTB Pub. 737, Tax Information for Registered Domestic Partners, or complete a federal pro forma Form 1040 or 1040-SR. Transfer the amount from the California RDP Adjustments Worksheet, line 27, column D, or federal pro forma Form 1040 or 1040-SR, line 11, to Form 540, line 13.

Differences between California and Federal Law

You can include the cost of such lodging while away from home if all of the following requirements are met. The caregiver must file as single, head of household, married filing jointly, or as a qualifying widow with a dependent child. In-home care providers include options like homemaking service providers and can help you manage everyday activities like cleaning, cooking, and running errands. You may also consider home health aides who can offer more extensive care and also serve as reliable companions.

To be eligible for Medicaid long-term care, recipients must have limited incomes and no more than $2,000 . Requires supervision due to a cognitive impairment (such as Alzheimer's disease or another form of dementia). Different states have their own credits that build on top of this federal credit, so be sure to look into what might be available in your area. Use a Flexible Spending Account to take advantage of the pre-taxed status of those dollars. They require substantial supervision due to a cognitive impairment such as Alzheimers or another form of dementia.

Deduct A Dependent’s Medical Expense

Enclose, but do not staple, your payment with your tax return. Make all checks or money orders payable in U.S. dollars and drawn against a U.S. financial institution. Do not combine your 2022 tax payment and any 2023 estimated tax payment in the same check. Prepare two separate checks and mail each in a separate envelope.

This is most common in nursing homes, but may apply to memory care, depending on individual needs and the facility. A variety of California tax credits are available to reduce your tax if you qualify. To figure and claim most special credits, you must complete a separate form or schedule and attach it to your Form 540. The Credit Chart included in this booklet describes the credits and provides the name, credit code, and number of the required form or schedule.

Coverage in your state may depend on waivers of federal rules. All those supporting the individual must agree on and sign a Multiple Support Declaration. These rules qualify for the resident or caregiver depending on who is incurring the expenses.

A taxpayer may elect to apply the provision regarding accounting for long term contracts to contracts entered into on or after January 1, 2018. The HRCTC is allowed in an amount equal to 25 percent of the total amount of the qualified taxpayer’s qualified expenditures in the taxable year not to exceed $250,000 per taxable year. A qualified taxpayer must request a tentative credit reservation from the FTB during the month of July for each taxable year or within 30 days of the start of their taxable year if the qualified taxpayer’s taxable year begins after July. For more information, go to ftb.ca.gov and search for hrctc. Next, calculate the amount spent on home care that exceeds 7.5% of the amount of your AGI.