Easing the Cost of Special Education
Deducting Tuition and Related Fees as Medical Expenses
Many schools and programs provide 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?
Taxpayers can deduct expenses paid during the tax year for medical care for the individual, and his or her spouse or dependents, to the extend 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 of 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 were a principal[al 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 attending 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.
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
The CPA Client Bulletin is prepared monthly by the staff of the AICPA for the clients of its members. The Bulletin does not have any official authority and the information therein should not be acted upon without professional advice. Copyright © 2004, American Institute of Certified Public Accountants, Inc., Harborside Financial Center, 201 Plaza Three, Jersey City, NJ 07311-3381. Printed in the USA. Gerri Chanel, Editor.
Additional Information Resource
IRS Publication 502 (provides additional information regarding qualification for the deduction of medical and dental expenses)
Of special note is the requirement under “Learning Disability” that “Your doctor must recommend that the child attend the school”. Another relevant section is “Schools and Education, Special.”
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