Tax Tips
Easing the Cost of Special Education - June 2005
Richard Scrivanich - Partner
Easing the Cost of Special Education: Deducting Tuition and Related Fees as Medical Expenses
Many schools and programs provide special education and treatment to students with learning and other disabilities, including emotional and behavioral disorders. Insurance rarely covers such costly programs. However, you may be able to deduct tuition, related fees, and medical expenses for dependents with disabilities.
Which expenses qualify?
You can deduct expenses paid during the tax year for medical care for you, your spouse, and your dependents, to the extent they exceed 7.5% of adjusted gross income. “Medical expenses” include amounts paid “for the diagnosis, cure, mitigation, treatment or prevention of disease or for the purpose of affecting any structure or function of the body.”
School tuition and fees may meet these tests. Under tax regulations, medical care includes the cost of a special school for a mentally or physically handicapped individual if the institution’s resources for alleviating the handicap are a principal reason for attendance. The cost of supplied meals and lodging and ordinary education incidentally furnished also qualifies. Medical care also includes the cost of the dependent’s attendance at a special school designed to compensate for or overcome a physical handicap or to qualify him or her for future normal education or normal living. The distinguishing characteristic of a “special school” is its curriculum.
Examples. Tax regulations, court cases, and IRS rulings have allowed deductions for programs that deal with:
- Teaching Braille or lip reading
- Severe learning disabilities caused by neurological disorders
- Inability to function in a normal school setting
- Severe adjustment reactions (including depression) to adolescence
- Attention deficit hyperactivity disorder
- Behavioral problems due to chronic drug abuse
- Dyslexia and other specific learning disabilities
Proving medical need
You must also show that the attendee has a medical need for the school’s resources and that the program was intended and expected to be of medical benefit.
Eligible students also may qualify for additional deductible medical expenses, including meals and lodging (paid to the school as part of its program), directly related incidental fees and expenses, local transportation costs, and out-of-town transportation costs for the attendee and family members if the school is in another city and visits are part of the school program. Qualifying medical expenses also may be reimbursable via an Internal Revenue Code section 125 cafeteria plan.
An important deduction for an important need
The costs of providing special education for a family member can be overwhelming. Ensuring all possible tax deductions for these expenses can at least ease the burden. If you incur these types of expenses, please call our office so we can be sure you are taking advantage of all available tax breaks.
If you have any questions regarding special education expenses which qualify as a medical deduction, or any other tax matter, please call me at (562) 698-9891.
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