Academic journal article Journal of Accountancy

Deducting Tuition and Related Fees as Medical Expenses: Easing the Cost of Special Education

Academic journal article Journal of Accountancy

Deducting Tuition and Related Fees as Medical Expenses: Easing the Cost of Special Education

Article excerpt

Many schools and programs provide education and treatment to students with learning and other disabilities, including emotional and behavioral disorders. Insurance rarely covers such costly programs. CPAs can assist parents in determining the deductibility of tuition, related fees and medical expenses for dependents with disabilities.

WHICH EXPENSES QUALIFY?

Under IRC section 213(a), a taxpayer can deduct expenses paid during the tax year for medical care for the individual, and his or her spouse or dependents, to the extent they exceed 7.5% of adjusted gross income. Under section 213 (d) (1) (A), "medical expenses" include amounts paid "for the diagnosis, cure, mitigation, treatment or prevention of disease or for the purpose of affecting any structure or function of the body."

School tuition and fees may meet these tests. Under regulations section 1.213-1(e)(1)(v)(a) , medical care includes the cost of a special school for a mentally or physically handicapped individual if the institution's resources for alleviating the handicap were a principal reason for attendance. The cost of supplied meals and lodging and ordinary education incidentally furnished also qualifies. Medical care also includes the cost of the dependent's attending a special school designed to compensate for or overcome a physical handicap or to qualify him or her for future normal education or normal living. Under revenue ruling 70-285, the distinguishing characteristic of a "special school" is its curriculum.

Examples. While regulations section 1.213-1(e)(1)(v)(a) cites as examples of special schools those that teach Braille or lip reading, court cases and IRS rulings have expanded the category to include costs of school programs that address

* Severe learning disabilities caused by neurological disorders. …

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