Tax Deductions Can Be Tricky for Disabled Students

Disabled child
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Julian Block
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Allowable medical expenses include payments for schooling children with physical or mental handicaps. But the IRS cautions that deductibility depends on whether youngsters attend schools that are “special,” as opposed to “regular.”

How does the IRS determine that schools are special, thereby qualifying tuition outlays as allowable medical expenses? When the main reason for attending is to use the resources available at the schools or other institutions to prevent or alleviate handicaps. Put another way, it’s permissible for schools to provide ordinary education, as long as the learning is “incidental” to the medical care.

Some obvious examples of places that pass muster are schools that teach Braille to the blind or lip reading to the deaf or give remedial language training to correct conditions caused by birth defects.

More is at stake than just deductions for tuition. The regulations also allow deductions for the cost of meals and lodging at the school, as well as travel expenses.

Regular schooling, though, is another story. An unyielding IRS says you must show some portion of your payment is specifically for medical treatment; otherwise, no deduction for costs incurred at a school without special facilities. It makes no difference that a doctor believes that your handicapped child will benefit from the curriculum, disciplinary methods, or other nonmedical advantages available at a conventional school.

The agency takes a particularly hard line against allowing any medical deduction for a private school for a child with minor disciplinary problems. It refuses to go along with a deduction unless the child suffers from a “disease” – a term that, for tax purposes, doesn’t include minor disciplinary problems or adolescent upsets.

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