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Give Me (a Tax) Break

There are actually five seasons – the fifth, tax season, is looming ominously on the horizon. Are you taking full advantage of Uncle Sam? Yes, he and his tax codes can work in favor for families of children with special needs. You may not realize it, but certain tax rules allow medical deductions for “diagnosis, cure, mitigation, or treatment … primarily to alleviate or prevent a physical or mental defect or illness” (IRS publication 502). Deductions may also be taken for additional therapies, but most treatments must be prescribed by a doctor or licensed healthcare professional. There is small print to this tax break, however, limiting the amount of medical expenses deducted. You can deduct only the amount of your medical and dental expenses that exceeds 7.5 percent of your adjusted gross income (AGI). The IRS gives this example: “Your AGI is $40,000, 7.5 percent of which is $3,000. You paid medical expenses of $2,500. You cannot deduct any of your medical expenses because they are not more than 7.5 percent of your AGI.” For more information, contact a professional tax advisor or attorney to help you understand this often-overlooked deduction.