It is not widely publicized but did you know that there are tax benefits for children with special needs?
There are two types of tax benefits; one is a tax deduction and one is a tax credit. A deduction is based upon the marginal tax rate of the tax payer and a tax credit is a dollar for dollar tax reduction.
Medical Expense Deduction: Taxpayers may claim medical expenses (after reimbursed by an insurance company…so the remainder not insured or the copays paid out), special instruction such as training or therapies (speech, OT, DT, PT,) books, materials, tutoring, diagnostic evaluations, etc.
Medical expenses must exceed 7.5 percent of the gross adjusted income in order to qualify as a deduction so most families are not able to use this deduction.
Child and Dependent Care Credit: This is a credit that is allowed for all child care expenses for children under the age of 13. However, if there is a disability that requires supervision the age requirement is waived. The deduction for up to $3,000 for one child and $6,000 for two children.
Additionally, summer camps, after school programs, and special needs programs also apply.
Adoption: Regardless of expenses, when adopting a special needs child, one can deduct a total of $11,500.
Volunteer Expenses: Out of pocket volunteer expenses include travel, transportation, meals, and lodging. Even costs related to your personal car can be deducted when doing volunteer work.
Donations: In the 2008 tax year donations must have receipts.
Make sure to keep your expenses on everything!
Misc.: Tax planning, preparation expenses, and special needs trust services are also all tax credits. Additionally, mileage to doctor’s appointments were tax deductions in 2006 (something I wish I had known, as we traveled over 60 miles one way to doctor appointments over 20 times that year = $864).
