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Tuesday, April 9, 2013

The IRS Offers Help to Parents of Special Needs Children

From Lending Hand Resources

April 6, 2013

Parents of special needs children have unique financial concerns - their children often need special care that is expensive. It is a good thing then that the government grants such families many special tax deductions. Families are often unaware of these possibilities, though.

The credits and deductions detailed below should be a start:


1. Special needs kids often require specialized diets. If you have a recommendation from your child's doctor for casein-free food, for instance, the cost of the diet is an allowable deduction. The rules only allow you to make a claim for what you spend in excess of what a regular diet would cost, though. You need to attach a letter from your doctor to your tax return to make this work.

2. Families with special needs kids often have large bills for therapy and medical treatment. If your child has a learning disability, autism, ADHD or another condition named by the IRS, anything you spend on helping your child with special education qualifies for therapy-related deductions.

You are allowed to deduct the cost of special tutoring, educational aids, transportation to special classes or therapy sessions, and any technological device that may be necessary for your child's health or learning needs.

3. If you find it difficult to get an Individual Family Service Plan or Individualized Education Program enforced, any legal expenses you incur in the process are deductible (NOTE: Not always; seek professional tax advice!).

If your school district won't recognize your child as a special needs case, though, legal expenses incurred on fighting them are not allowed. However, fees paid to medical professionals involved in your efforts to determine eligibility for special education are deductible.


Tax deductions only go so far. There are many tax credits that give you a direct discount on your tax bill. The Earned Income Tax Credit and the Child and Dependent Care Credit are the most useful tax credits available to parents with special needs kids today.

1. The Earned Income Tax Credit is a refundable tax credit for poor families with children (ones with AGIs under approximately $39,000 a year). It is a tax subsidy by the government. You can look up EITC Assistance on the IRS website to find out if you qualify. If you do, you may get a tax refund even if you don't pay taxes. This tax credit covers all children under 13, usually. No age restrictions apply for special needs kids, though.

2. If you pay someone to take care of your child - when you are away at work, for instance - the Child and Dependent Care Credit allows you to claim a tax credit worth $3000 (you get to claim up to $6000 if you have more than one child). Money you spend on child care, day care and after-school programs qualifies as well.

3. Under the American Opportunity Credit tax credit, refunds of up to $2500 of the college tuition expenses that you incur for each special needs child each year are allowed. A lifetime learning credit for all courses that your child undertakes after high school exists - worth $2000 per annual return.

Parents of special needs kids often live under tremendous financial stress. Thankfully, the law does recognize these challenges and helps reduce the burden.

And this just in...

You can usually deduct legal expenses that you incur in attempting to produce or collect taxable income or that you pay in connection with the determination, collection, or refund of any tax.

You can also deduct legal expenses that are:
  • Related to either doing or keeping your job, such as those you paid to defend yourself against criminal charges arising out of your trade or business,
  • For tax advice related to a divorce if the bill specifies how much is for tax advice and it is determined in a reasonable way, or
  • To collect taxable alimony.

For information, see the IRS Publications page at www.irs.gov. The information above is from Publication 529.


  1. Do you know if the deduction for dietary expenses applies for adults as well? I have Celiac Disease and must follow a GF diet. Gluten Free foods are so much more expensive than other foods. How would I find out if Celiac is a covered condition?

  2. My mother has celiac disease. You can use the deduction the same way it was described as above.

  3. Does anyone know if Advocate's fees can be deducted and how? Thanks

  4. Does anyone know if you can deduct the cost incurred by parents of a special needs child over the age of 18 for special needs camps or respite care?

  5. i really don't understand this tax credit , my 3 year has autism can explain this to me

  6. i really don't understand this tax credit , my 3 year has autism can explain this to me

    1. get a tax accountant and ask them for advice they would know best.

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