Special Education Expenses deducted as Medical Expense

By | February 1, 2014

Deducting Special Education Costs as Medical Expense

The IRS has generous tax rules for taxpayers who find themselves in situation in which they may have more living expenses than other taxpayers. Expenses that taxpayers incur in order to enable a child to compensate for or overcome disabilities or to prepare a child for future normal education or normal living are deductible medical expenses and can be deducted yearly on a tax return.

Special Education Expenses deducted as Medical Expense

In general, any expenses for therapy that helps your child’s adaptation are deductible medical expenses. In addition, the expenses of your child’s schooling at a “special school” for mentally or physically disabled individuals are deductible if the resources of the school are the reason for your child’s presence and the educational services provided are rendered only as an incident to the medical care provided. The IRS says exactly, ‘“Deductibility of tuition depends on exactly what the school provides an individual because a school can have a normal education program for most students, and a special education program for those who need it. Thus, a school can be ‘special’ for one student and not for another.”


Schools Qualifying for Medical Expense Deduction

A school qualifies as a special school only if the primary focus of its curriculum is to enable students to compensate for or overcome disabilities, and to prepare them for future normal education or normal living. Schools that would qualify for the medical expenses deduction would be:

  • schools that provides special services for children with mental and/or physical disabilities, such as schools for the teaching of braille or lip reading are special schools because the primary purpose of the schools is alleviating or treating a physical handicap.
  • Similarly, schools with special programs for treating severe learning, mental, psychological or emotional disorders or dyslexia are special schools.

In contrast, a school that does not provide a special program, but is beneficial because of its small class size or because it provides added services within a normal academic setting, is not a special school, since the primary purpose of the school is academic. No tax deduction would be allowed for sending a child to an ordinary school.


Deducting the cost of special medical expenses

In addition, a taxpayer cannot deduct any special education expenses to the extent the expenses are borne by the state or locality. Remember that before deducting the cost of special medical expenses,  the medical expense deduction is limited to the amount that exceeds 7.5% of your adjusted gross income.