YOWZA! The Taxman Cometh ...

TAX TIPS for Families of Children with Disabilities 

Because parents of children with special needs children have unique financial concerns, please read below for some important information concerning tax credits and deductions. 
(If you do not have a child with a disability, please share this information with someone who does.)

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 one of the other conditions 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. 
HOWEVER  -- If your school district won’t recognize your child as a special needs case, though, legal expenses incurred on fighting them are not allowed.

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 come in and 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). The 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.