Tax Tips

If you haven't looked at the calendar lately, just a glance at your mailbox and the envelopes from your bank, your employer, and others with your 2010 income statements should have clued you in to the fact that tax preparation season is upon us.

Families of children with learning challenges should be aware of some tax deducations available for special education and related services. A good starting point is IRS Publication 502, Medical and Dental Expenses for 2010 Returns. This publication outlines the key principal behind deducting these expenses -- they need to be considered as medical expenses. As the IRS notes,

"You can include in medical expenses fees you pay on a doctor’s recommendation for a child’s tutoring by a teacher who is specially trained and qualified to work with children who have learning disabilities caused by mental or physical impairments, including nervous system disorders.

You can include in medical expenses the cost (tuition, meals, and lodging) of attending a school that furnishes special education to help a child to overcome learning disabilities. A doctor must recommend that the child attend the school. Overcoming the learning disabilities must be a principal reason for attending the school, and any ordinary education received must be incidental to the special education provided. Special education includes:
• Teaching Braille to a visually impaired person,
• Teaching lip reading to a hearing-impaired person, or
• Giving remedial language training to correct a condition caused by a birth defect.

You cannot include in medical expenses the cost of sending a problem child to a school where the course of study and the disciplinary methods have a beneficial effect on the child’s attitude if the availability of medical care in the school is not a principal reason for sending the student there."

While the IRS Publication can serve as a starting point for exploring this issue, much of the nuance in what is deductible and what is not can be found in IRS Rulings. One terrific resource for understanding both the tax law and understanding how it might -- or might not -- benefit your family can be found in a lengthy article on the helpful website LDonline. Note that this was prepared in 2009, but little has changed in this area of the law since then. Of course, deductions for special education services are subject to the same limits as other medical expenses and may not be fully deductible for that reason.

It is important to remember that only your accountant can give you tax advice applicable to your personal situation, and that none of us here are tax experts. But whether you do your own taxes with pencil and calculator, or use tax preparation software, or hand over your year's information to your accountant, remember to keep in mind that there may be tax benefits from some of the expenses your family has encountered as you have dealt with your child's learning difficulties.