Last part in a three part series – Part 1 July 9 and Part 2 July 10, 2013.

CRITERIA FOR A SPECIAL SCHOOL

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

Continuation 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