Tax Tips for Parents of Children with Disabilities

It’s tax season again. As a parent of a child with a disability, you may qualify for many tax benefits often overlooked by many parents and tax preparers.

If you find a benefit that you could have claimed in past years, you can file an amended tax return retroactively up to three years. This means you can file claim benefits even for the 2003 tax year if you do it before April 15, 2007.

For complete information for the 2006 tax year and to find out more about tax rules, consult the official Internal Revenue Service Publications posted at

These tips are no substitute for advice from your tax professional and should not be considered as such.

Medical Deductions

The following deductions only apply if you itemize your deductions on a Schedule A form. Itemized deductions must exceed the standard deduction, a rule that disqualifies most people. In addition, you can deduct medical expenses only if they exceed 7.5 percent of your adjusted gross income, which also disqualifies most people. Nevertheless, let’s proceed:

Do you pay for tutors who have special training in your child’s disability?

Does your child attend a school designed to educate children with her disability?

Do you pay for speech therapy, language instruction, sign language training, or remedial education?

Tuitions for special schools as well as transportation costs to and from the school are tax deductible if the child’s doctor recommended the school. Usually there must be a professional medical diagnosis of a neurological disorder such as autism, Attention Deficit Disorder/Hyperactivity and others.

You cannot make this claim if your insurance company or public school district is paying for the special school. Such payment counts as taxable income.

Books, software and other educational materials can be tax deductible.

Out-of-pocket payments for different therapies like speech and language training qualify if recommended by a doctor. Also, diagnostic evaluations are tax deductible.

Conference Expenses
Did you attend a conference that gave you specific information pertaining to your child’s disability? If you can show that your doctor recommended the conference and that you got medical information that was useful in making decisions about your child’s treatment and care, then you can deduct the cost of attendance

Again, this would be a medical deduction so the rules about Schedule A or medical expenses apply here too.

Child Care Expenses
The IRS allows a child care credit for children under age 13. However, there is no age limit for children with disabilities. The IRS allows credits for regular childcare, after-school programs, and summer day camps. The rules are complex and based on your family’s adjusted gross income.

Earned Income Tax Credits
This is for people with adjusted gross incomes under $36, 348. A severely disabled dependent child qualifies with no age limit, even as an adult, if the child continues to live with his parents.

Health Savings Accounts
Check out the new rules for Health Savings Accounts and Flexible Savings Arrangements that allow you to pay disability-related expenses with pre-tax dollars. See IRS Publication 969 for rules.