Is there a tax deduction for special education tuition? And how do you know if a special education school qualifies for that tax break? These questions come into our offices every year – so we wanted to share what the IRS has to say.
We all know one component of itemized deductions is the cost of medical care. The total of eligible medical expenses paid during the tax year is reduced by 7.5% of the taxpayer’s adjusted gross income (AGI). While you are probably familiar with most of the eligible medical expenses, one type of eligible medical expense that you may not be aware of is the cost of a child attending a special education school.
I can’t receive a tax deduction for special education unless the school is qualified as a special school. What is the definition of a special school?
This type of school is designed to overcome a physical or mental handicap, in order to qualify the individual for future normal education or for normal living. This includes a school for the teaching of Braille or lip reading. The principal reason for attending the school is the special resources available at the school for alleviating the handicap.
Treating a child at such a school can be financially burdensome to the child’s parents. Especially when health insurance does not cover the specialized care. Provided the parents have total itemized deductions greater than their standard deduction, they can get help from the tax law.
Eligible medical costs that allow a tax break for tuition:
- The tuition for ordinary education that is incidental to the special services provided at the school, and
- The cost of meals and lodging supplied by the school. The distinguishing characteristic of a special school is the substantive content of its curriculum. The curriculum may include ordinary education, but only if the ordinary education is incidental to the school’s primary purpose of enabling students to compensate for, or overcome a handicap.
What the IRS ruled about deductible medical expenses
In a private letter ruling, the IRS said that for a child diagnosed with multiple learning disabilities, tuition paid to attend a school designed to assist students in overcoming their disabilities and developing appropriate social and educational skills was a deductible medical expense.
When a tax deduction for special education applies
IRS ruled that where the school uses special teaching techniques to assist its students in overcoming their condition and that these techniques along with the care of other staff professionals are the principal reasons for the child’s enrollment at the school, then the school is a “special school.” Thus, the child’s tuition expenses at the school in those years he is diagnosed as having a medical condition that handicaps his ability to learn are deductible.
The Tax Court has also held and IRS has privately ruled in other similar situations. For example where a school attended by a student with a medical problem didn’t qualify as a special school. This may be because the ordinary education isn’t incidental to the special services provided. However, a portion of the cost of the special program or special treatment may still be a deductible medical expense. Just not the entire tuition would be deductible.
If you have questions related to this or other medical deductions, please give this office a call at 360-778-2901.
Is Interest Paid on Borrowed Money Tax Deductible
