Tax Planning for Special Needs Families

March 24, 2015

Families with children who have special needs often have unique financial concerns especially now that tax season is upon us.  While we are NOT tax attorneys or even accountants, we would like to pass along the following information on tax deductions, credits and resources that you may find handy when dealing with your taxes this year.  Please use these lists to guide you in your discussions with a qualified tax consultant.

There are many tax deductions and credits available.   Parents of children with special needs should familiarize themselves with the deductions and credits and take care to document all expenses related to their children’s medical expenses, development and therapy. Here are a few:

Medical and Therapy Expense Deduction – For income tax purposes, learning disabilities are a type of medical condition. This may include autism, ADHD, cerebral palsy, and other learning disabilities. These expenses are limited but may include:

  • Special schooling such as: tutoring that is specifically intended to address the special needs of the child.
  • Regular education when it is intended to treat the child’s special needs.
  • Aides that a child may require to benefit from education.
  • Exercise programs, if they are recommended by a medical professional.
  • Transportation to and from special schools or therapy sessions.
  • Equipment, devices and supplies necessary to treat or alleviate a medical condition, including technology items such as communication devices. Resources: Friendshipcircleblog on Tax Deductions for Special Needs Families

Special Foods – If a special diet is medically recommended and documented such as gluten-free, or casein-free, the additional cost above and beyond the cost of similar food items may be covered.

Legal Expenses – Your attorney fees may be covered if it was necessary for you to hire one to get the services and medical coverage you need.

Child and Dependent Care Credit – This may be applied when you pay someone to care for your dependent, and it provides a tax credit of up to $3,000 per dependent, to a maximum of $6,000 for all dependents.  Child-care, after-school programs and day camp qualify for the credit. The credit is available for children under the age of 13, but the age limit does not apply to older children with special needs.

Earned Income Credit – This credit generally may be applied by families with a low to moderate income and children under the age of 19, or up to age 23 for full-time students. However, for adult children living with their parents, the age limit does not apply.

Resources :

IRS Special Needs Guide

NESCA News and Notes

Parenting: Special Needs Tax Help

Tax Deduction Parenting Blog