Resource for Families: Could Educational Therapy Qualify for Tax Benefits?

At NILD, we are committed to equipping families and educators with the tools they need to support student success. In our ongoing efforts to share valuable resources, we want to highlight a potential opportunity for families utilizing educational therapy services.

According to IRS Publication 502, educational therapy may qualify as a deductible medical expense under specific circumstances. While we are not providing tax advice or guaranteeing coverage, here are some important considerations:

When Educational Therapy Might Qualify

Physician Recommendation Required:

• A physician must determine that the therapy is medically necessary.
• A formal diagnosis of a learning disability or other impairment is required.

Threshold for Deduction:

• Medical expenses, including educational therapy, must exceed 7.5% of your adjusted gross income (AGI) in a calendar year.
• Example: For an AGI of $100,000, medical expenses must total more than $7,500 to qualify.

Special Education Expenses:

• Costs for specialized tutoring by a qualified teacher or attending a school that provides special education may qualify under the medical requirements above.
• The school or therapy must primarily address the learning disability, with ordinary education being secondary.

Expenses Cannot Be Claimed Twice:

• Expenses reimbursed through Health Savings Accounts (HSA), Flexible Spending Accounts (FSA), or Medical Savings Accounts (MSA) cannot also be claimed as tax deductions.

Next Steps for Families

Navigating tax benefits can feel complex, but taking the following steps may help:

• Consult a tax preparer or financial advisor to determine eligibility and ensure compliance.
• Consult your individual HSA, FSA, or MSA provider to determine eligibility and ensure compliance.
• Maintain thorough documentation, including physician recommendations, receipts, and proof of medical necessity.

For more details, visit the IRS Publication 502 page for official guidelines.

Frequently Asked Questions (FAQ)

Can I claim educational therapy expenses if my child does not have a formal diagnosis?

To qualify for a tax deduction, the IRS requires that the therapy be deemed medically necessary by a physician, with a formal diagnosis of a learning disability or other impairment. Without a diagnosis and recommendation, expenses may not be eligible.

Does this apply to all educational therapy programs?
Only therapy services that specifically address a diagnosed learning disability or impairment and meet IRS guidelines for medical necessity may qualify. Ordinary tutoring or academic enrichment programs would not typically meet the criteria.

What if my total medical expenses don’t exceed 7.5% of my AGI?
If your medical expenses (including educational therapy) do not exceed 7.5% of your AGI, they will not qualify for a deduction. However, you may still explore options for using HSA, FSA, or MSA funds, depending on your provider’s policies.

How can I confirm eligibility for my HSA, FSA, or MSA?
Each spending account provider has unique guidelines. Contact your plan administrator to determine whether educational therapy expenses are eligible for reimbursement under your specific plan.

Supporting Families in Their Educational Journey

At NILD, we believe every child deserves the opportunity to reach their full potential. While we cannot provide tax advice, we are committed to equipping families with resources to help them make informed financial decisions regarding their child’s education.

If you have questions about how educational therapy can benefit your child, we encourage you to contact us and explore the transformative impact of our programs.