Did you know that what you pay to your retirement community may save you money on your taxes? There’s a tax deduction available for seniors who are part of continuing care retirement communities (CCRCs) with a “Type A” Lifecare contract.
Keep reading to learn more about the tax benefits a continuing care retirement community like Riddle Village can bring you and how to plan ahead for your medical expenses and other retirement needs.
Understanding CCRCs
There are many misconceptions about continuing care communities and the type of care they provide. They often offer a variety of care, from independent living to personal care and skilled nursing. Residents pay an entry fee to become part of the community and a monthly fee while they’re living there. As their needs change, so can the type of care they receive from the community. Riddle Village’s variety of care allow seniors to have a plan in place for the future.
Our luxury retirement community offers extensive amenities, from multiple restaurants and entertainment venues to an auditorium, outdoor and indoor sports facilities, and 24/7 access to nursing staff.
Financial Planning for Retirement
Your financial planning for retirement probably began a long time ago. It’s important to know that you can use the monthly service fee, entrance fee and other medical expenses at a continuing care retirement community to claim exemptions as a prepaid medical expense. Even if you don’t need skilled nursing care when you first enter the community, your expenses are going toward the eventuality that you may require skilled nursing services at some point in the future.
Tax Deductions and CCRCs: A Deep Dive
If you require medical care at a CCRC, you no longer need to determine whether medical expenses are tax-deductible because they’re built into your contract from the beginning. Your one-time entry fee and any other ongoing fees may qualify as potential tax deductions as well.
Eligibility for Tax Deductions
While expenses for a CCRC are considered exempt, certain criteria need to be met before you can claim them. First, to itemize medical expenses, they need to exceed 7.5% of your adjusted gross income. Whether you file taxes as single, married or head of household can also impact your ability to claim deductions. Only nonrefundable portions of your entrance fee and other expenses can be deducted. This is to prevent people from claiming a deduction on resident’s fees that will be refunded to them later.
Calculating Your Potential Tax Deductions
There are a lot of variables you need to consider when calculating your tax exemption for a lifecare community. Is your deduction equivalent to or greater than your standard deduction? How does being married or head of household change things? Only a certified tax preparer is qualified to determine whether you should use your CCRC expenses as tax deductions and calculate how much you can deduct accurately. We recommend sourcing one for guidance.
Making the Decision: Why Riddle Village?
Riddle Village offers a larger campus-like setting, community focus, customizable private residence and comprehensive health care services. When a resident has healthcare needs that change, they have access to greater levels of care right on campus, without needing to move into a different facility. These benefits are why Riddle Village is one of the leading continuing care retirement communities in the area. Arrange a visit to see the Riddle Village difference for yourself.
Wrapping Up: Maximizing Your Retirement Benefits With CCRC Tax Deductions
Depending on the type of continuing care community you choose, there is potential to save money on your taxes. The entry fee and monthly fee can both qualify for a medical tax deduction, but calculating your exemptions can be overwhelming. The best way to take full advantage of these tax benefits is to work with a professional.
Riddle Village is here to help answer all your questions and help plan for the future. Call 610-891-3700 or fill out our online form to schedule a visit.