The term “Special Needs” encompasses a lot of children and a recent report by the Centers for Disease Control estimated the rate to be as high as 1 in 50.  A special needs child is always a difficult and emotional situation.

However, in some cases you can get a little financial help on your taxes from Uncle Sam.  Knowing your tax deductions can help with the financial aspect of a special needs child.  You should make sure you consider the following tax deductions.

The Dependency Exemption:

With many special needs children, they can be your dependent for tax purposes even if they are over the normal age of 19 (24 student).  These age restrictions do not apply to many special needs children.  To qualify they have to be permanently and totally disabled and not able to engage in any substantial gainful activity by reason of a medical physical or mental impairment that can be expected to last for more than 12 months.  You will need a doctor’s note to this effect.

Special School Instruction Deductible as Medical Expenses:

The cost of attending a “special school” for a mentally or physically handicapped child is deductible as a medical expense if the main reason for sending the child to the school is to alleviate the handicap through the school’s resources. Regs. Sec 1.213-1(e)(1)(v).

These expenses have to exceed the 10%-of-the-adjusted-gross-income floor.

Home Improvements:

Many home improvements can be deducted as a medical expense.  To do this, the expense has to be incurred for a medical necessity and be used primarily by the special needs child.

Improvements that qualify for medical expense deductions fall into two categories:

  1. Costs which change the house to provide medical care, and
  2. Costs for removing barriers in the house for special needs children.

In addition, costs incurred to operate or maintain the improvement such as additional utility and maintenance costs, can also be deducted on your tax return as medical expenses.

Conferences and Seminars:

Attendance at conferences and seminars dealing with your child’s disability may also be tax deductible.  Generally, the deductible amount is the costs of registration fees and travel.  There should be a doctor’s note and the seminar should be about the disability. Rev. Rul. 2000-24.

State Taxes:

Here in Connecticut and New York, many of these deductions apply for state tax purposes too.  So whether you live in Norwalk CT or Pound Ridge NY makes a difference.