Are special school expenses a medical deduction?

• Author: Gibson, Daniel J.

Today, taxpayers have many choices when seeking medical help, especially specialized help for their child. Often, they wonder whether they can deduct, for Federal tax purposes, the cost of special schooling, if their child were to require it due to a medical condition.

Example: C, a taxpayer, has a child, S, who suffers from emotional and disciplinary disorders. On the advice of a psychiatrist, C transfers S to a boarding school in Connecticut that specializes in college preparatory education for children with certain disabilities. Within three weeks, the school asks C to remove S, because S is disruptive. The school psychiatrist advises C to transfer S to a "therapeutic wilderness program" in Utah. S completes the program within six months. C then transfers S to a boarding school in Georgia, primarily a college preparatory school for special-needs children. The unreimbursed cost for these schools during the year is approximately $35,000.

Can C deduct the expenses? Under Sec. 213(a), a taxpayer can deduct expenses paid during the tax year, not compensated by insurance or otherwise, for his or her medical care or that of a spouse or a dependent, to the extent that such expenses exceed 7.5% of adjusted gross income. The floor is 10% for taxpayers subject to the alternative minimum tax; see Sec. 56(b)(1)(B)).

According to Regs. Sec. 1.2131 (e)(1)(v)(a) , although ordinary education is not medical care, the cost of medical care does include the cost of attending a special school for mentally or physically handicapped individuals, if the institution's resources for alleviating such handicap are a principal reason for the student's presence at the school. In such a case, the cost of attending the special school includes the cost of meals and lodging (if supplied), as well as that of ordinary education furnished incidental to the special services. Thus, the cost of medical care includes the cost of attending a special school designed to help students compensate for, or overcome, a physical handicap, and to qualify them for future normal education or for normal living (e.g., a school that teaches students to read Braille or to lip read).

Cases

Merely obtaining a psychiatrist's recommendation that a student should attend a particular school does not justify a deduction, even if the doctor's diagnoses the student as being mentally ill; see Fischer, 50 TC 164 (1968), acq., 1969-2 CB xxiv; Atkinson, 44 TC 39 (1965); and Enck, TC Memo 1967-58 (1967). In...