Tax Tips for Families with Special Needs Children - (Tax
Year 2002)
by Shannon Nash, Esq., C.P.A.
April is National Autism Awareness Month!
It’s a cause for celebration indeed if it weren’t for
that pesky day that strikes the fear in the hearts of every procrastinator
– April 15th. But this year, special needs parents have a
lot of tax savings, courtesy of Uncle Sam, and they couldn’t
of come at a better time.
Medical Expenses
From therapies to numerous visits to doctors, parents of
special needs children each year pay for numerous medical expenses
– many of which are not reimbursed by insurance plans. But
medical expenses can only be taken if they exceed 7.5% of the parents
adjusted gross income. That means that for a family earning $100,000
a year, they would have to spend over $7500 in unreimbursed medical
expenses before being able to deduct a penny.
For many special needs parents, this
limit may not be that hard to reach. The following medical and dental
expenses that are paid for by the parent, and not reimbursed under
insurance plans should count as itemized deductions:
• Visits to doctors' offices.
• Visits to dentists' offices.
• Prescribed medicine and drugs like Ritalin.
• Foods purchased for special diets like the gluetin casein
free diet.
• Attending a special school aimed at educating special needs
kids (including meals, lodging, and tuition).
• In-home intensive therapies like Applied Behavioral Analysis,
Lovaas, or Sonrise.
• Other therapies like speech, occupational, auditory integration,
equestrian, aquatic, behavioral, music, art and any similar therapies.
• Institutional care facilities.
• Durable medical aides such as wheelchairs, hearing aids
or eyeglasses.
• Admission and travel expenses for parents to attend conferences
related to the child’s disability (but the costs or meals
and lodging at these conferences are not included).
• Transportation incurred in getting medical care.
• Legal fees to get the special needs child medical treatment,
which could include fights with the local school district to get
the child certain therapies.
Child Daycare Credit
Parents of special needs children are able to take the child daycare
credit for expenses incurred while they are at work for a disabled
child regardless of age.
529 College Savings Plans
With 529 College Savings Plans, parents can invest up to $2,000
a year per child in an account that grows and is distributed on
a tax-free basis. The catch: the money must be used for qualified
education expenses like tuition, room and board, books, supplies
and fees. For special needs parents these plans offer a very flexible
way to save for a child’s educations – whether it be
full-time or part-time, a 4-year college or vocational school. Also
the regular time limits do not apply to parents with special needs
children. For these children, parents can contribute to these plans
even after the special needs child is 18 and the money can be paid
out for educational expenses even after the child is 30.
Resources
• IRS’s website – http://www.irs.treas.gov
• Medical Expenses – Publication 502, Medical and Dental
Expenses
• Child Daycare Credits – Form 2441,Child and Dependent
Care Expenses and Publication 503, Child and Dependent Care Expenses
• 529 College Savings Plans -- IRS Publication 970, Tax Benefits
for Education (See Chapter 6 under Qualified Tuition Programs)
Shannon Nash is a tax attorney and C.P.A. She
received her Bachelor’s degree in accounting from the University
of Virginia, McIntire School of Commerce and her law degree from
the University of Virginia School of Law. She is a member of the
Virginia and Washington D.C. bar and holds a C.P.A. license from
the State of Virginia. She is an officer of the American Bar Association
and Chair of the National Bar Association Tax Section. Shannon lives
in Westlake Village, California (outside of Los Angeles) with her
husband, an ex-submarine officer, and her son. She also writes the
"Special Needs Journey"
column.
March 15, 2002
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