A recent ruling by the Internal Revenue Service (IRS) has determined that there is a wide range of special education expenses that may be deducted as medical expenses. Although this is a private letter ruling, which may not be relied upon by other practitioners or persons wishing to avail themselves of similar decisions, it does set a precedent if another person wishes to request a private letter ruling for their own personal situation.
The IRS has explained that “normal education” does not rise to the level of medical care for tax purposes because it is not designed to help someone overcome a medical disability. Accordingly, for education expenses to qualify as deductible medical expenses, a physician or other qualified professional must diagnose a medical condition that requires special education to correct or help the individual to better cope with that condition.
Therefore, if a person is seeking to obtain a tax deduction for medical expenses, which include special education expenses, these expenses must be prescribed to compensate for or overcome a child’s disabilities or to prepare the disabled child for future ordinary education or ordinary living experiences.
For example, the tuition for a child’s schooling at a special school for mentally or physically disabled individuals is deductible. This includes the cost of the ordinary educational expenses as well as any special educational expenses, since the child must attend this special school. The IRS has ruled that the educational services provided are rendered incidental to the medical care provided at the school.
A school qualifies as a special school if the primary focus of its curriculum is to enable students to compensate for or overcome disabilities. This would include treating severe learning disabled children, children with psychological or emotional disorders, or dyslexia as a special need. The determination of whether a school is a special school is made on the basis of the curriculum made available to the child, not the curriculum of the school as a whole.
Naturally, before attempting to deduct these expenses, a professional tax advisor should be consulted to ensure that the deductibility of the educational expense is going to be permitted, otherwise, the deduction may subject the taxpayer to an audit, further disallowance of the medical deduction, and also cause penalties and interest to be assessed.
By: Hyman G. Darling, Esquire
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