Tax Deduction For Learning Disabilities

July 1, 2014 by Geoff Nixon

Some education costs can be tax deductible

If your child has a learning disability, ADHD or other physical, mental or emotional impairments, you may qualify for tax benefits. It’s likely that 15% to 30% of families with a disabled child have one or more unclaimed tax benefits.

This guide provides a summary of the most significant federal income tax benefits and should not be considered legal advice. Tax decisions should not be made simply on the basis of the information provided here. You should also explore potential state income tax benefits, which are too numerous to review here.

Also see IRS Publication 502, “Medical and Dental Expenses.” The following expenses may qualify for the deduction if a medical professional recommends the service or treatment for the child and there is a medical diagnosis of a neurological disorder, such as a severe learning disability:

  • Tuition for a private school
  • Tutoring
  • Specialized materials (e.g., books, software and instructional materials)
  • Diagnostic evaluations (by a private practitioner)
  • Therapy
  • Transportation expenses for a private school or tutor

Retroactive Claims for Refunds

The IRS allows taxpayers to file amended returns and collect refunds for unclaimed tax benefits retroactively up to three years. Besides Parents, Who Can Claim a Child as a Dependent? A relative caretaker (e.g., a grandparent or aunt) or a non relative caretaker (e.g., a foster parent or legal guardian) may be able to claim a child as a dependent and qualify for related tax benefits. A relative caretaker and the child are not required to live in the same household. More information is available in IRS Publication 501; “Exemptions, Standard Deduction and Filing Information”; pages 9-19: http://www.irs.gov/pub/irs-pdf/p501.pdf.

For eligibility requirements please refer to this article at LD Online.

Health Savings Accounts (HSA) and Flexible Savings Arrangements (FSA)

An alternative approach is use a HSA or a FSA to handle LD-related medical expenses. The bottom line for these plans is that:

  1. The amount must be determined at the start of year.
  2. Unused FSA are lost if not transferred to an HSA.

Please note, the information outlined here may become out-dated at any time. Please seek your own tax advice before acting on any of the information presented.