New IRS Rule: Tax Deduction for Special Education Tuition

brailleAs all parents with special needs children know, addressing a child’s physical and learning disabilities can be a huge financial burden. Educating these children so that they are able to achieve the maximum level of independence is both difficult and costly. Previously the IRS had allowed parents of special needs children to deduct the cost of tuition or other programs designed to help disabled children succeed, but the entire tuition could not be deducted. In 2011 that rule changed.

As of 2011, the IRS has ruled that tuition for a special school designed to help students manage or overcome disabilities can be counted as a deductible medical expense if the child’s primary reason for attending that school is its medical benefit. The school may offer subjects included in an ordinary school curriculum, but it must differ from an ordinary school in that it utilizes specialized education techniques to address handicaps. That is, parents cannot claim a medical deduction for the entire tuition of an ordinary private school simply because they believe their special needs child will perform better in that environment or in the special education program at that school. But they can claim a deduction if they send their child to a specialized school whose curriculum is tailored to address a particular disability or set of disabilities. For instance, parents of a child who is legally blind could claim a deduction for sending their child to a Braille school; parents of a deaf child could claim the medical deduction for sending their child to a school that focuses on lip reading; and parents of a child with a developmental disorder inhibiting visual or spatial learning could claim the deduction for sending their child to a school that focuses on auditory learning.

In order to qualify for the medical tax deduction, the child’s doctor must recommend attending the specialized school. If the child does not qualify to attend this kind of school or if no such school is available in the geographical area, a doctor can recommend tutoring by a qualified teacher who is trained to work with children who have mental and/or physical impairments. In this case, the cost of tutoring counts as a medical deduction.

Like other medical expenses, the cost of tuition or tutoring for a special needs child is only deductible if it exceeds 7.5 percent of the parents’ adjusted gross income. Up to the 7.5 percent mark, the parents are responsible for covering their child’s medical expenses.

For more information about medical deductibles, check out IRS Publication 502, “Medical and Dental Expenses.”  You can find information about special education on page 13 of this document. If you have questions, get in touch with us at Elder Law of East Tennessee. We’d love to hear from you and will be happy to help you consider your options for dealing with disability and financing care.