What Expenses are Tax Deductible ?

The number of children affected by neurological conditions continues to skyrocket . The most recent estimates are 1 in 11 children is affected by attention deficit hyperactivity disorder ( ADHD ) and 1 in 36 children is affected by autism spectrum disorder ( ASD ). Some are affected by both . Other conditions that may require special medical treatment include cerebral palsy , Down syndrome , traumatic brain injury and other learning disabilities . Often these conditions require therapies and treatments that go beyond a typical doctor ’ s visit and may not be covered by insurance . Parents wonder if those expenditures not covered by insurance might be tax deductible . Often , they are !

IRS Code Sec . 213 ( d )( 1 )( A ) defines “ medical care ” to include amounts paid for the diagnosis , cure , mitigation , treatment or prevention of disease , or for the purpose of affecting any structure or function of the body .

There are at least two Revenue Rulings ( 69-607 and 78-340 ) that confirm neurological disorders and severe learning disabilities are medical conditions covered under IRC 213 . Sometimes expenditures might look like personal expenses , but for these individuals , they are medical in nature . Jacobs v . Commissioner , 1974 , established a “ but for ” test :

If the expenditure is not wholly medical in nature it must be ( a ) an essential element of the treatment and ( b ) not otherwise incurred “ but for the condition the expenditure would not have been made .”

Examples include therapeutic horseback riding , music therapy , aqua therapy , braille books , specially designed seating , bedding , safety equipment , home alarm systems and more .

As children grow up and become young adults there may be other expenditures , including job coaching , educational therapists and support for college or university success , special living arrangements and more . Medical expenses are deductible for “ other dependents ” if the only test they do not meet is the support test . Also , a divorced parent may claim medical expenses for a child even if the rules for separated or divorced parents do not allow them to claim the child as a dependent .

The key to capturing all deductible medical expenses is to obtain an understanding of the individual ’ s “ Plan of Care .” Parents should work with their child ’ s physician , and if applicable the local regional center , to ensure they have a written plan of care that documents all services , supports and treatments their child requires .

It is essential that the entire course of treatment be under the supervision of appropriate medical personnel . In the case of home improvements , the costs are deductible to the extent they exceed any increase in the home ’ s fair market value [ Reg . 1.213-1 ( e ) ( 1 ) ( iii )].

Such improvements could include central air conditioning for someone with COPD , an elevator or the installation of a swimming pool if that was the only means of providing aqua-based therapy . For items such as the elevator or the pool , the maintenance costs would be similarly deductible .

Improvements that have no effect on the home ’ s fair market value can be claimed as a medical expense ( Rev . Rul . 87-106 , 1987-2 CB 67 ). Examples would be the cost of retrofitting a home to allow a wheelchair or the cost of removing lead paint . Lead poisoning can resemble and complicate other conditions , such as autism .

Also , parents who attend conferences to obtain medical information concerning treatment and care for their child may deduct the admission and transpiration costs , along with related books and materials . A parent ’ s attendance is considered to be primarily for and

10 CALIFORNIA CPA OCTOBER 2024 www . calcpa . org