Deductions Related to Special Needs

Impairment-Related Work Expenses

Impairment-related expenses are those ordinary and necessary “business expenses” that are:

• Necessary for you to do your work satisfactorily
• For goods and services not required or used, other than incidentally, in your personal activities

• Not specifically covered under other income tax laws

Reimbursements for Medical Expenses

A taxpayer may be reimbursed by an insurance company or other institution for deductible medical expenses. The amount included in income for the year is the least of the following:

• The reimbursement amounts
• The excess of total itemized deductions over the standard deduction

Medical Expense Deductions

An itemized deduction for the unreimbursed medical expenses can be claimed by individuals for themselves and their dependents in excess of a certain percentage of an individual's adjusted gross income. Deductible payments are:

• Health care providers
• Treatment facilities
• Prescription drugs
• Therapies
• Health care premiums

Special Education Qualifying as Medical Expense Deductions

Under U.S. law all children are entitled to an equal and appropriate public education. Many public schools do not have special programs or facilities to handle the needs of children with physical or neurological disabilities. As a result, it is sometimes necessary for these children to attend special schools where the focus is not only oneducation, but also on alleviating the disability of the child.

Paid tuition or related costs that are not covered by the school district. If the school qualifies asa special school, the unreimbursed cost of sending the child to the school, is deductible, subject to certain provisions.

This deduction may also include amounts paid for:

• Lodging
• Meals
• Transportation
• The cost of ordinary education incidental to the special services provided by the school
• Any costs incurred for the supervision, care, treatment, and training of an individual with physical and/or neurological disabilities are also deductible, if provided by the institution

Case law and IRS administrative rulings reveal a litany of examples considered special schools by the IRS:

• Schools for teaching braille to the blind or lip reading to the deaf
• Schools for training the mentally disabled
• A military school that accepted a student with physical and mental disabilities (if the school gave personal daily attention to the student to improve upon the student’s low attention span)
• A boarding school recommended by a psychiatrist (the school had psychiatrists, psychologists, and social workers who developed a special program for each student)
• Schools for average and above-average students with learning disabilities, which provide an environment where they can adjust to a competitive classroom situation
• A traditional school’s curriculum that is specially designed to accommodate the needs of children who are disabled and who have IQ scores ranging from 50 to 75

Note:  Traditional schools with special curricula can be classified as a special school for an individual.Both the special school and tutoring need to be recommended by a physician.

Medical Conferences and Seminars

• Conferences and seminars that parent attend to learn more about their child’s disability
• Amounts paid for the registration fees and travel expenses (deductible as medical expenses if the costs are primarily for and essential to the dependent's medical care

Note: Parents should obtain a recommendation from their child’s doctor to ensure the medical deduction is not disallowed.  The conference or seminar must deal specifically with the medical condition from which the child suffers, not just general health and well-being issues. The deduction may not extend to any meals and/or lodging costs incurred while attending the conference.