Year 2006 Tax Benefits for Parents of Children with Learning Disabilities

If you have a child with a severe learning disability, you may qualify for valuable tax benefits. If your child has AD/HD, or other physical, mental, or emotional impairment, you may also qualify for tax benefits.

A relative caretaker (e.g., a grandparent or aunt), or a non-relative caretaker (e.g., a foster parent or legal guardian), may be able to claim a child as a dependent and qualify for related tax benefits. A relative caretaker and the child are not required to live in the same household.

Eligibility is determined by a five-part test. The most critical requirement is that the caretaker must provide more than half of overall financial support for the child. For example, there may be cases where the caretaker is making a substantial financial contribution toward LD-related expenses (e.g., private school tuition) that represents more than half of the overall cost of support for the child. In those situations, the caretaker could list the child as a dependent, and claim the tuition as a medical expense deduction

Generally, to qualify for the deduction, the child’s doctor must recommend the special school, therapy, or tutoring, and there must be a medical diagnosis of a neurological disorder, such as severe learning disability, made by a medical professional. Transportation expenses to the special school or to the tutor also qualify for a medical expense deduction.

Diagnostic evaluations also qualify for a medical expense deduction. This can include testing by a speech-language pathologist, psychologist, neurologist, or other person with professional qualifications.

The following expenses may qualify for the deduction if a medical professional recommends the service or treatment for the child and there is a medical diagnosis of a neurological disorder, such as severe learning disability:
Tuition to a private school
Specialized materials (e.g., books, software, and instructional material)
Diagnostic evaluations (by a private practitioner)
Transportation expenses to the private school or tutor

Source: © 2007 Charles and Helen Schwab Foundation