Tuition Tax Break for Parents with Children with Special Needs

Tuition Tax Break for Parents with Children with Special Needs

Children with special needs should have a tax break from medical costs in School


A component of itemized deductions is the cost of medical care. The total of eligible medical expenses paid during the tax year is reduced by 7.5% of the taxpayer’s adjusted gross income (AGI). While you are undoubtedly familiar with most of the medical expenses eligible for the deduction, such as payments for doctor/dentist care, surgeries, prescription drugs and other commonly encountered medical costs, one type of eligible medical expense that you may not be aware of is the cost of a child attending a special school. This type of school is designed to compensate for or overcome a physical or mental handicap, in order to qualify the individual for future normal education or for normal living. This includes a school for the teaching of Braille or lip reading. The principal reason for attending must be the special resources available at the school for alleviating the handicap.


See Relax Tax’s College Playbook at


Basic Qualifications for Grant of Eligibility

Treating a child at such a school can be financially burdensome to the child’s parents, especially if the care isn’t covered by health insurance. Provided the parents have total itemized deductions greater than their standard deduction, they can get help from the tax law, which allows as eligible medical costs:

  • The tuition for ordinary education that is incidental to the special services provided at the school, and
  • The cost of meals and lodging supplied by the school. The distinguishing characteristic of a special school is the substantive content of its curriculum, which may include some ordinary education, but only if the ordinary education is incidental to the school's primary purpose of enabling students to compensate for or overcome a handicap.


See this related post from Matt Sacco: Not Your Typical Scholarship System: Project Scholarship
Project Scholarship is a non-profit 501(c) organization that helps move students from classroom to career with little to less debt. Project Scholarship helps students to earn micro-scholarships by completing employer projects. It also allows students to expand their network and meet new people. Project scholarship was a proven concept which was proven when version 1 was released. Once the world went into a pandemic, we went back to the drawing board to see how we can improve the experience with version 2!


IRS deducting medical expense for schools with children with special needs


In a private letter ruling, the IRS said that for a child diagnosed with multiple learning disabilities, tuition paid to attend a school designed to assist students in overcoming their disabilities and developing appropriate social and educational skills was a deductible medical expense.

IRS ruled that where the school uses special teaching techniques to assist its students in overcoming their condition and that these techniques along with the care of other staff professionals are the principal reasons for the child’s enrollment at the school, then the school is a “special school.”  Thus, the child’s tuition expenses at the school in those years he is diagnosed as having a medical condition that handicaps his ability to learn are deductible.

Side Note: Private letter rulings by the IRS are written responses to a taxpayer’s request for guidance on a particular issue or complex situation. A private ruling is applicable only to the specific tax situation, can’t be cited as precedence by other taxpayers and doesn’t commit the IRS to taking a similar position with regard to other taxpayers. However, a ruling does provide a look into the IRS’ position on the matter in question and can sometimes lead to a broader revenue ruling that would apply to all taxpayers. There is a fee, often several thousand dollars, that the taxpayer is required to pay when submitting their request for a private ruling.


See this related post from Dennis Harabin: Early Planning for College Expenses
Some in Congress have proposed “free” (i.e., government-paid) tuition for community college attendance. Even if that proposal were to become law, it still leaves parents and their children-students responsible for paying for college and university attendance if the student wants a bachelor or other degree. Over the years, Congress has provided a variety of tax incentives to help defray the cost of education. Some tax-related education benefits are currently available while others will be beneficial only with long-range planning, and the sooner these plans are implemented, the better.

The Tax Court has also held and IRS has privately ruled in other situations that, where a school attended by a student with a medical problem doesn't qualify as a special school because the ordinary education isn't incidental to the special services provided, the costs of the special program or special treatment (but not the entire tuition) may still be a deductible medical expense.


Do you need more information? You can reach out to Dennis Harabin at Relax Tax today!


If you have questions related to this or other medical deductions, please give this office a call at 551-249-1040.


 Recommended Readings: 


Relax Tax is your trusted financial partner.
We obsess about helping people retain more of what they earn.
We can provide you with a set of solutions for your financial goals no matter your financial situation. If you want to learn more about taxes, obligations, investments, and how to handle them, Click Here to schedule your initial meeting.