In the last article, we described deducting medical expenses. This article discusses when special education costs can be deducted as a medical expenses.

This article is geared toward helping parents with children with disabilities understand the tax laws. As a general rule, the costs if education are considered to be ordinary living expenses and not deductible. However, if the program is designed to help someone overcome a medical disability, it can be deductible. This article lists some of the laws which will help you make that determination.

Please do not use this article as definitive advise, as your situation may vary. Consult your attorney or tax professional. Definitions of which children qualify as dependents also changes from year to year, so always check the latest information. Nothing on this page creates an attorney-client relationship.

We start with the letter of the law , the tax statute written by Congress.  Section 213  of the Internal Revenue Code states:

There shall be allowed as a deduction the expenses paid during  the taxable year, not compensated for by insurance or otherwise, for medical care of the taxpayer, his spouse, or a dependent ... For purposes of this section - The term ''medical care'' means 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,

Internal Revenue Service Regulations, 26 CFR 1.213-1

The U.S. Treasury, the IRS has issued regulations which are authority for deducting the costs of special education:

While ordinary education is not medical care, the cost of medical care includes the cost of attending a special school for a mentally or physically handicapped individual, if his condition is such that the resources of the institution for alleviating such mental or physical handicap are a principal reason for his presence there. In such a case, the cost of attending such a special school will include the cost of meals and lodging, if supplied, and the cost of ordinary education furnished which is incidental to the special services furnished by the school. Thus, the cost of medical care includes the cost of attending a special school designed to compensate for or overcome a physical handicap, in order to qualify the individual for future normal education or for normal living, such as a school for the teaching of braille or lip reading. Similarly, the cost of care and supervision, or of treatment and training, of a mentally retarded or physically handicapped individual at an institution is within the meaning of the term medical care.

IRS Publication 502- excerpts

The IRS has also published helpful guidance:

https://www.irs.gov/publications/p502

Some relevant portions copied here:

Disabled Dependent Care Expenses

Some disabled dependent care expenses may qualify as medical expenses or as work-related expenses for purposes of taking a credit for dependent care. You can choose to apply them either way as long as you do not use the same expenses to claim both a credit and a medical expense deduction.

Learning Disability

You can include in medical expenses tuition fees you pay to a special school for a child who has severe learning disabilities caused by mental or physical impairments, including nervous system disorders. Your doctor must recommend that the child attend the school. See Schools and Education, Special, later.

You can also include tutoring fees you pay on your doctor's recommendation for the child's tutoring by a teacher who is specially trained and qualified to work with children who have severe learning disabilities.

Schools and Education, Special

You can include in medical expenses payments to a special school for a mentally impaired or physically disabled person if the main reason for using the school is its resources for relieving the disability. You can include, for example, the cost of:

The cost of meals, lodging, and ordinary education supplied by a special school can be included in medical expenses only if the main reason for the child's being there is the resources the school has for relieving the mental or physical disability.

You cannot include in medical expenses the cost of sending a problem child to a special school for benefits the child may get from the course of study and the disciplinary methods.

Therapy

You can include in medical expenses amounts you pay for therapy you receive as medical treatment.

“Patterning” exercises. You can include in medical expenses amounts you pay to an individual for giving “patterning” exercises to a mentally retarded child. These exercises consist mainly of coordinated physical manipulation of the child’s arms and legs to imitate crawling and other normal movements.

Legal Fees

You can include in medical expenses legal fees you paid that are necessary to authorize treatment for mental illness. However, you cannot include in medical expenses fees for the management of a guardianship estate, fees for conducting the affairs of the person being treated, or other fees that are not necessary for medical care.

Our Update: On September 26, 2008, the IRS released a decison which allowed a taxpayer to deduct the legal fees where the fees were directly related to the obtaining of medical treatment. The taxpayer needed to establish a guardianship to commit a family member for medical treatment which could not be provided otherwise. Thus the attorney fees and travel expenses for the legal proceeding were deductible. 2008-0033.(pdf) While this IRS document is informational only it is supported by existing law: see Gerstacker v. Commissioner, 414 F.2d 448 (6th Cir. 1969); Rev. R. 71-281.)

Special school qualifies as medical expense

In a recent letter ruling (# 200521003) the taxpayers had two children who were diagnosed as having disabilities caused by medical conditions including dyslexia that handicap their ability to learn. School X provides each handicapped child with a program of special education designed to enable the child to deal with the medical handicaps and move on to study at a regular school. The IRS noted that normal education is not medical care because it is not designed to help someone overcome a medical disability. Thus, a physician or other qualified professional must diagnose a medical condition requiring special education to correct the condition for that education to be medical care. The school need not employ physicians to provide that special education, but must have professional staff competent to design and supervise a curriculum providing medical care. Overcoming the learning disabilities must be a principal reason for attending the school, and any ordinary education received must be incidental to the special education provided. Special education thus includes teaching Braille to a visually-impaired person, teaching lip reading to a hearing-impaired person, giving remedial language training to correct a condition caused by a birth defect, or overcoming other disabilities. Dyslexia can be sufficiently severe as to be such a handicap (Rev. Rul. 69-607). "Deductibility of tuition depends on exactly what the school provides an individual because a school can have a normal education program for most students, and a special education program for those who need it. Thus, a school can be 'special' for one student but not for another." The IRS ruled that, based on the taxpayers' representations, that the children were attending School X principally to receive medical care in the form of special education in those years each child is diagnosed as having a medical condition that handicaps that child's ability to learn.

Thus, a school doesn't have to be attended exclusively by children with learning disabilities in order for tuition to be deductible if the other criteria are met--for just those learning-disabled children who participate in a special program in a regular school -- as long as participation in that program is their principal reason for attending the school.

Caution. A letter ruling is directed only to the taxpayer requesting it. It may not be used or cited as precedent, but it is a useful illustration of the IRS's thinking.

https://www.irs.gov/pub/irs-wd/0521003.pdf June 23, 2005