Tuition paid for a school focused on treating learning disabilities can be classified as a medical expense, according to a private letter ruling from the Internal Revenue Service.Like other deductible medical expenses, the original ruling (PLR 2005-21003) found that the cost of tuition is deductible only to the extent that medical expenses for the year cumulatively exceed 7.5 percent of a taxpayer's adjusted gross income.
According to a previous revenue ruling, the distinguishing characteristic of a special school is the “substantive content of its curriculum.” Meaning that while a school can provide ordinary education, that education must be incidental to the school's primary purpose of enabling students to overcome a handicap.
Under that definition, a school can be “special” for one student but not for another, though the letter makes a point of noting that normal education is not medical care because it is not designed to help someone overcome a medical disability.
In the scenario addressed in the letter, two of a taxpayer’s children were diagnosed as having disabilities caused by medical conditions, including dyslexia, which handicapped their ability to learn. Both children were sent to a school “with a program of special education designed to enable the child to deal with the medical handicaps and move on to study at a regular school.”
Under the tax code, the taxpayer can deduct expenses paid during the taxable year for medical care within the limits of Section 213. Medical care includes amounts paid for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting a structure or function of the body.
The two main conditions outlined in the letter are that:
- A physician, or other qualified professional, must diagnose a medical condition requiring special education to correct the condition for that education to be medical care; and,
- The school need not employ physicians to provide that special education, but must have professional staff competent to design and supervise a curriculum providing medical care.
Among the special education methods singled out in the letter are teaching Braille to a visually-impaired person, teaching lip reading to a hearing-impaired person, or giving remedial language training to correct a condition caused by a birth defect. The IRS said that dyslexia could be sufficiently severe as to be such a handicap.
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