For elderly Americans, some of the proposed tax changes may have a big impact on their bottom line. There is a proposal to eliminate the medical tax deduction which allows people who itemize their deductions to write off certain medical and dental expenses. These deductions extend to "tax-dependents" which may include an aging parent who lives with the taxpayer. This is a tax deduction that approximately 6 percent of filers currently take—often people with expensive care needs such as seniors in nursing homes and people with chronic medical conditions.
Under the current tax code, seniors living in continuing care retirement communities with a Type-A residency contract who itemize their taxes are often able to deduct a portion of these retirement community fees as pre-paid medical expenses (expense must exceed 10 percent of their AGI). If the medical expense tax deduction is eliminated, this could result in a significant lost deduction for many continuing care retirement community residents.
For more information on estate planning and current tax implications, please contact Stouffer Legal.
