Extra deductions assit special needs families
By: H. Amos Goodall, Jr.
With the deadline looming for those who haven't yet filed their taxes, parents of children with special needs should consult a tax expert on the unique deductions that may be available to them. Special schools, medical care and supportive therapies can cost special needs families thousands of dollars a year, and research shows that as many as 30 percent of these families may not be taking advantage of tax relief opportunities.
"Special needs families are maxed out on a daily basis from shuttling their children to therapy and medical appointments, attending to their children's activities of daily living, and the other day-to-day stresses of the complicated home lives," said Bridget O'Brien Swarts, president of the Special Needs Alliance, an organization of attorneys representing people with special needs and their families. Four Pennsylvania attorneys have been invited into membership in the Special Needs Alliance.
"Often the last thing on parents' minds is their taxes, but it's very important that families are aware of the unique deductions available to them," Swartz added.
Medical expenses can be astronomical for special needs families. They are deductible if they meet or exceed 7.5 percent of the adjusted gross income. The key is being aware of the deductions that are available. Any of the following may qualify as a deductible medical expense:
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tuition costs for specialized schools
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costs for therapies not covered by insurance (e.g., occupational, speech or physical therapy)
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diagnostic evaluations
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transportation expenses for medical travel and transportation
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costs for medical conferences and seminars attended by a parent to better a child's condition (e.g., travel, hotel, conference registration)
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home improvements (e.g., ramps, elevators, etc.) made in response to a disability and/or medical condition that do not otherwise increase the value of the home.
It is important in each case to review specific facts and circumstances with a knowledgeable adviser who can recommend appropriate deductions.
In many cases, friends or relatives of special needs families may want to help out with costly medical expenses.
Typically, there is a $13,000 limit on gifts before they are taxable, but if the money is paid directly to the medical facility or provider, an unlimited amount can be given without being taxed.
Additionally, families should know there is no age limit to cliam a person with special needs as a dependent, as long as the family provides at least 50 percent of their support and the person lives with the family as least half the year. Families also can claim a tax credit for the amount they pay to an individual to care for a dependent with special needs, as long as their household income is below a certain level (determined by the number of disabled dependents in the household).
"It is vital that families are diligent about keeping records and receipts continually, not just around tax season," Swartz said. "Whether it's a co-payment, a therapy bill or a receipt for travel to a medical conference, expenses are only deductible if they are itemized."
There are many excellent local tax practitioners who can advise family members on this important tax deduction.