Assisted Living & Senior Care, CPA & Tax Services

Why Assisted Living and Senior Care Operators in Dallas Need a Specialized CPA

Running an assisted living or senior care community in the Dallas-Fort Worth area means managing a business where accounting mistakes carry real financial consequences. Between cost segregation opportunities on your facility, caregiver payroll compliance with the Texas Workforce Commission, resident deposit liabilities that must be tracked separately from revenue, and meal program cost allocations, general-purpose tax preparers routinely miss deductions or create compliance exposure for operators like you.

At AG Freideman, we work with assisted living and senior care owners across Dallas, Plano, Frisco, McKinney, and the surrounding DFW suburbs. Al Freideman is a licensed CPA with over 30 years of experience, and he handles every client personally. No hand-offs to junior staff, no revolving door of associates. We understand the specific financial mechanics of residential care operations, from how the Texas Health and Human Services Commission licensing structure affects your entity setup to how your facility’s square footage allocation drives your depreciation strategy.

If you’re looking for a CPA who genuinely understands the assisted living industry, call us at (972) 893-3481 or book a free consultation to discuss your situation.

How Does Facility Depreciation and Cost Segregation Work for Assisted Living Properties?

Cost segregation is one of the largest tax savings opportunities available to assisted living facility owners, and most general CPAs either don’t raise it or don’t know how to apply it to residential care properties. A cost segregation study reclassifies components of your building from the standard 39-year commercial depreciation schedule into shorter recovery periods of 5, 7, or 15 years, accelerating your deductions significantly in the early years of ownership.

For a typical Dallas-area assisted living facility valued at $2 million to $5 million (excluding land), a properly conducted cost segregation study can shift 20% to 40% of the building’s depreciable basis into those shorter-lived asset categories. That means components like specialized bathroom fixtures, nurse call systems, commercial kitchen equipment, backup generators, landscaping, parking lot surfaces, and security systems get depreciated much faster than the building shell.

Under current IRS rules for 2026, bonus depreciation allows 40% first-year expensing on qualifying assets (down from 60% in 2025 and 100% in prior years under the Tax Cuts and Jobs Act phase-down schedule). If you purchased or renovated a facility recently and haven’t had a cost segregation study performed, you may be leaving tens of thousands of dollars in deductions on the table. We coordinate with qualified engineering firms to ensure your study meets IRS Audit Techniques Guide standards for the assisted living industry, then apply the results correctly to your return.

What Are the Payroll Compliance Risks for Caregiver Staff in Texas?

Caregiver payroll is where assisted living operators face their highest compliance risk, and mistakes here trigger penalties from both the IRS and the Texas Workforce Commission. The most common error we see is misclassifying caregivers as independent contractors when they should be W-2 employees. The IRS uses a behavioral, financial, and relationship test to determine worker status, and caregivers who work set schedules in your facility, use your supplies, and follow your care protocols almost always qualify as employees.

Misclassification penalties are steep. The IRS can assess 100% of the employee’s share of FICA taxes (the employer already owes their half), plus penalties of up to $50 per unfiled W-2 and additional accuracy penalties. Texas does not have a state income tax, but the Texas Workforce Commission enforces unemployment insurance compliance. If you’re caught misclassifying workers, TWC can retroactively assess unemployment taxes plus interest going back up to four years.

Beyond classification, assisted living payroll involves tracking overtime correctly under the Fair Labor Standards Act for caregivers who work 24-hour shifts or live-in arrangements. The DOL has specific rules about sleep time and meal period deductions for live-in employees that differ from standard overtime calculations. Our monthly bookkeeping and payroll services ($300 to $600 per month) handle all of this: proper classification documentation, overtime calculations, TWC quarterly reporting, and W-2 preparation, so you stay compliant without spending your weekends on payroll spreadsheets.

How Should Assisted Living Facilities Handle Resident Deposit Liabilities?

Resident deposits, including move-in fees, community fees, and refundable entrance deposits, are not revenue when you collect them. They are liabilities on your balance sheet until they are earned or become nonrefundable according to your residency agreement terms. Misrecording deposits as income when received inflates your taxable income and creates a mess when refunds are issued or residents transfer.

Texas does not have a specific statute governing assisted living deposit escrow requirements the way some states do, but your residency agreements create a contractual obligation. We set up your bookkeeping so that each deposit is tracked individually by resident, with clear journal entries that move funds from the liability account to revenue only when contractually earned. This protects you in two ways: it prevents you from paying taxes on money you may have to return, and it gives you a clean audit trail if a resident’s family disputes a deposit refund.

For facilities that collect nonrefundable community fees (common in Dallas-area assisted living communities, often ranging from $2,000 to $5,000), we ensure these are recognized as income in the correct tax period based on when the fee becomes nonrefundable under your agreement, not simply when the check clears.

Are Meal Program Costs Fully Deductible for Assisted Living Operations?

Yes, meals provided to residents as part of your care services are 100% deductible as a business expense, unlike the 50% limitation that applies to most business meals. The key distinction is that resident meals are a component of the care service you provide, not a business entertainment expense. The IRS treats meals furnished to residents in a care facility the same way it treats meals provided in a hospital or nursing home setting: as an ordinary and necessary cost of delivering your service.

However, proper documentation matters. You need to track food purchasing, kitchen labor, and related costs (equipment maintenance, disposable supplies, dietary consulting) as a separate cost center in your books. This not only ensures full deductibility but also gives you accurate per-resident meal cost data that is essential for setting your daily rates competitively in the Dallas market. We structure your chart of accounts to capture meal program costs cleanly, so your tax return reflects the full deduction and your management reporting shows you exactly what meals cost per resident per day.

Assisted Living and Senior Care Tax Mistakes We Fix

After 30 years of working with business owners across multiple industries, we’ve seen patterns in how assisted living operators get tripped up. Here are the specific mistakes we correct most often:

• Depreciating the entire facility over 39 years without a cost segregation study. This is the single most expensive missed opportunity. Operators who have owned their building for even two to three years can file a Form 3115 (change of accounting method) to catch up on missed accelerated depreciation in a single tax year, with no need to amend prior returns.
• Classifying caregivers as 1099 contractors. We reclassify workers correctly, set up proper payroll withholding, and in some cases help operators apply for IRS Section 3509 relief to reduce the penalty exposure from prior misclassification.
• Recording refundable deposits as revenue in the year received. We restate the books to properly separate liabilities from earned income, preventing overpayment of taxes and potential issues during an IRS examination.
• Missing the Texas Franchise Tax filing or miscalculating the margin. Every Texas LLC or corporation operating an assisted living facility must file a franchise tax report and Public Information Report annually with the Texas Comptroller. The no-tax-due threshold for 2026 is $2.47 million in total revenue, but operators above that threshold must choose between the 70% of revenue, cost of goods sold, compensation, or $1 million deduction methods, and the right choice varies by your cost structure. Our franchise tax filing runs $250 to $500.
• Failing to track capital improvements separately from repairs. A new HVAC system is a capital expenditure that gets depreciated; replacing a broken thermostat is a deductible repair expense. The distinction matters, and we see operators lumping everything together, which either defers deductions they could take now or triggers depreciation recapture problems later.