Tag Archive for earned income tax credits

Potential Income Tax Benefits For Special Needs Families – Part 3

iStock_School Bus Disabled SignXSmallLast part in a three part series – Part 1 July 9 and Part 2 July 10, 2013.


A school is a special school if the ordinary education it provides is incidental to the special services  provided. Thus, the curriculum of a special school may include some ordinary education, but this must be incidental to the school’s primary purpose to enable the student to compensate for or overcome a handicap, to prepare him or her for future normal education and living. Examples of a special school are schools with programs to “mainstream” children with neurological disabilities (e.g., autism spectrum disorders) and schools that teach Braille, lip reading, or sign language. Deductible special school costs include: lodging and meals, transportation, incidental educational costs provided by the institution, and costs of supervision, care, treatment, and training. Regular schools be classified as a “special school” if it has a special curriculum for the disabled individual (Rev. Rul. 70-285). The costs for private tutoring by a teacher who is specially trained and qualified to deal with severe learning disabilities are deductible, provided the child’s doctor recommended such tutoring (Rev. Rul. 78-340). Dyslexia is a medical condition that handicaps the child’s ability to learn. Therefore, if a child is diagnosed with dyslexia, the costs of special education to overcome dyslexia are deductible medical care expenses (Letter Ruling 200521003).

Credit For Special Needs Adoption Expenses

•  $12,970 for a special needs child ($12,650 in 2012), regardless of adoption expenses.
•  Must be a U.S. citizen or resident who requires adoption assistance. Read more

Potential Income Tax Benefits For Special Needs Families – Part 2

Image converted using ifftoanyContinuation from Part 1 Posted on July 9, 2013.

Medical travel and transportation:

•  For 2013 tax returns: 24 cents per mile.
•  For 2012 tax returns: 23 cents per mile.
•  Lodging costs (but not meals) up to $50 per day are deductible for the taxpayer and one additional  person if an overnight stay is necessary.

Capital Expenditures

As a general rule, capital expenditures are not permitted as a medical expense deduction. However, a medical expense deduction is available when the capital expenditure is made primarily for the medical care of the taxpayer, the taxpayer’s spouse, and/or the taxpayer’s dependents. To secure a current medical expense deduction for a capital expenditure, the cost must be reasonable in amount and incurred out of medical necessity for primary use by the individual requiring medical care. These deductions fall into two categories:

(1) expenditures improving the taxpayer’s residence while also providing medical care (e.g., a central air conditioning system for an individual suffering from a chronic respiratory illness). These expenses are deductible only to the extent that the cost exceeds the increase in the property’s fair market value as a result of the capital expenditure. For example, after a physician recommends installing an elevator for an individual suffering from a chronic and disabling arthritic condition limiting the individual’s mobility, an elevator costing $20,000 is installed in the taxpayer’s home. As a result of the expenditure, the home increases in value by $5,000. Therefore, $15,000 may be deducted as a medical expense. Expenditures incurred in the second category are fully deductible under the presumption that there is no increase in the property’s value as a result of removing a physical barrier. Read more

Potential Income Tax Benefits For Special Needs Families – Part 1

iStock_Tax wordsXSmallAs the number of children diagnosed with autism, asperger’s syndrome, and other neurological disorders continues to skyrocket, the disruption it causes in the lives of all those concerned is unmistakable—as are the costs of providing care for the special needs child. As reported by the Autism and Developmental Disabilities Monitoring (ADDM) Network in March 2012, as many as 1 out of 88 children born today has an autism spectrum disorder or ASD. A report by the Centers for Disease Control and Prevention (CDC) has estimated that rate is as high as 1 in 50. Other disabilities are also becoming more prevalent, according to the CDC. Between 1997–1999 and 2006–2008, there was an 18.2% increase in blindness/sight impairment among children age 3 to 17, a 9.1% increase in seizures, and a 24.7% increase in “other developmental delay” (which excludes autism, attention deficit hyperactivity disorder, and learning disabilities). Further complicating the situation, parents with special needs children are often of unaware of possible tax benefits that are available and forgo hundreds, if not thousands, of dollars in potential tax deductions and credits. Michael A. O’Connor, an attorney who has written extensively on this topic, believes that 15% to 30% of families with a disabled child have one or more unclaimed tax benefits. Among these potential tax benefits are deductions or credits for the dependency exemption, medical expenses, special instruction, capital expenditures for medically required home improvements, impairment-related work expenditures, and the earned income tax credit.


Dependency Exemption:

A taxpayer may claim a dependency exemption ($3,900 for 2013), for a “qualifying child” or a “qualifying relative.” With passage of the Working Families Tax Relief Act of 2004, P.L. 108-311 (effective 2005), the definition of a “qualifying child” and “qualifying relative” in Sec. 152(a) was amended to provide a uniform definition for purposes of the dependency exemption and for the child tax, dependent care, and earned income tax credits. Read more