Planning for long-term involves more than the preparation of powers of attorney and counseling on possible asset transfers to qualify for Medicaid reimbursement. Steps should also be taken to make certain that the person receiving care continues to file an income tax return and does so at a minimum possible income tax cost. Practitioners should be familiar with the procedure for filing a return on behalf of an incapacitated individual. The medical expense deduction, while of little importance for most taxpayers, is critical for many elderly, particularly for those receiving long-term care. Long-term care insurance and life insurance may be tapped as a financial resource for paying the costs of long-term care without fear of adverse tax consequences. Significant tax benefits also are available to families paying for a parent's or other relative's care, including the claiming of an additional personal exemption and deduction of the relative's medical expenses.
David M. English,
Income Tax Planning for Long-Term Care, 28 ACTEC 5
Available at: https://scholarship.law.missouri.edu/facpubs/776