(2023)
Nursing home costs: When children have to pay for their parents
If a parent is in a care home due to the need for care or in a retirement home due to age, their own income is often not sufficient to cover the costs. In many cases, the children must pay for the parents. These can be payments to the home, the social services department, or directly to the parent. The question is whether and how you can involve the tax authorities in the home costs.
- Payments for care home accommodation due to the need for care, disability, or illness are deductible as general extraordinary expenses under section 33 of the Income Tax Act, although a reasonable burden must first be exceeded. Not only care costs but also accommodation and meals are deductible.
- Payments for accommodation due to age in a retirement home or senior citizens' residence are considered typical maintenance payments and can only be deducted up to the maximum maintenance amount of 10,347 Euro (2023) under section 33a (1) of the Income Tax Act. This is only possible if the parent's own income and benefits are less than 10,971 Euro or 21,942 Euro (2023) for a couple. This amount consists of the deductible maximum amount of 10,347 Euro and the allowance of 624 Euro.
Currently, the Cologne Tax Court has confirmed that payments to the social services department for the accommodation of the mother in a nursing home are deductible as extraordinary expenses under section 33 of the Income Tax Act, with the tax office applying a reasonable burden. The payments are deductible in the actual amount and do not need to be divided into care costs and accommodation and meals (Cologne Tax Court, 26.1.2017, 14 K 2643/16).
The payments made for the home accommodation cannot be partially reinterpreted as typical maintenance payments and thus deducted under section 33a (1) of the Income Tax Act without applying a reasonable burden. The judges clarify that there is no choice between deduction as extraordinary expenses under section 33 of the Income Tax Act and deduction as maintenance payments under section 33a (1) of the Income Tax Act. In principle, the home costs paid are to be reduced by a so-called household saving due to saved food and housing costs if the household of the person in need of care is dissolved.
A new and welcome insight from the judges: A household saving is not to be credited if the own income and benefits of the person in need of care, which they use for their maintenance, are both above the standard rates for basic income support under SGB XII and above the value to be set as household saving (2021: 9,744 Euro). In such cases, there is no household saving for the person being maintained and certainly not for the person obliged to provide maintenance (Cologne Tax Court, 26.1.2017, 14 K 2643/16).
Note: The reasonable burden depends on the amount of income, the number of children, and marital status. This is your deductible, which you must cover from the expenses before the general public of taxpayers helps you. The Federal Fiscal Court recently specified a new method for calculating the reasonable burden, which is significantly more advantageous for citizens.
