Tax Deductibility of Special Services

Page Contents:

• IRS Code section 213 (the letter of the law --starting point-- relevant portions)
• New: Letter ruling  200521003: tuition for schools addressing special needs is deductible
• Revenue Ruling 78-340 (easy to read explanation and ruling)  "Amounts paid by a taxpayer for language training for his child to correct a condition caused by congenital damage to the brain are amounts paid for medical care under section 213 of the Code."
• Revenue Ruling 69-607   (easy to read explanation and ruling)   Medical expenses; tuition or tutoring fees. A taxpayer whose child has severe learning disabilities caused by a neurological disorder may deduct as a medical expense amounts paid upon recommendation of the child's doctor for tuition fees for the child's education at a special school that has a program designed to educate children with such disabilities so that they can return to a regular school within a few years. If recommended by the doctor, amounts paid for the child's tutoring by a teacher specially trained and qualified to deal with severe learning disabilities may also be deducted"
• Rev. Rul. 71-281 Attorneys fees used to get services are deductible (but not if the services were available anyway).
• Publication 502 (current IRS advice to taxpayer regarding all categories of medical expenses, confirms deductions for special services).
• Regulation 1.213-1
• Dependent and Child Care Credit (applies to disabled children over the age of 12)
• full text of section 213

link to Revenue Ruling 2000-24 (Are amounts paid by an individual for expenses (including transportation costs, registration fee, meals and lodging) of attending a medical conference relating to the chronic disease of the individual's dependent deductible as medical expenses)

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Section 213. Medical, dental, etc., expenses

 (a) Allowance of deduction
      There shall be allowed as a deduction the expenses paid during
    the taxable year, not compensated for by insurance or otherwise,
    for medical care of the taxpayer, his spouse, or a dependent (as
    defined in section 152), to the extent that such expenses exceed
    7.5 percent of adjusted gross income.
(d) Definitions
      For purposes of this section -
        (1) The term ''medical care'' means amounts paid -
          (A) for the diagnosis, cure, mitigation, treatment, or
        prevention of disease, or for the purpose of affecting any
        structure or function of the body,
          (B) for transportation primarily for and essential to medical
        care referred to in subparagraph (A),
(2) Amounts paid for certain lodging away from home treated as
      paid for medical care. - Amounts paid for lodging (not lavish or
      extravagant under the circumstances) while away from home
      primarily for and essential to medical care referred to in
      paragraph (1)(A) shall be treated as amounts paid for medical
      care if -
          (A) the medical care referred to in paragraph (1)(A) is
        provided by a physician in a licensed hospital (or in a medical
        care facility which is related to, or the equivalent of, a
        licensed hospital), and
          (B) there is no significant element of personal pleasure,
        recreation, or vacation in the travel away from home.
      The amount taken into account under the preceding sentence shall
      not exceed $50 for each night for each individual.

full text is below

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New

 Special school qualifies as medical expense

In a recent letter ruling (LTR 200521003) the taxpayers had two children who were diagnosed as having disabilities caused by medical conditions including dyslexia that handicap their ability to learn. School X provides each handicapped child 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. The IRS noted that normal education is not medical care because it is not designed to help someone overcome a medical disability. Thus, 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. 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. Overcoming the learning disabilities must be a principal reason for attending the school, and any ordinary education received must be incidental to the special education provided. Special education thus includes teaching Braille to a visually-impaired person, teaching lip reading to a hearing-impaired person, giving remedial language training to correct a condition caused by a birth defect, or overcoming other disabilities. Dyslexia can be sufficiently severe as to be such a handicap (Rev. Rul. 69-607). "Deductibility of tuition depends on exactly what the school provides an individual because a school can have a normal education program for most students, and a special education program for those who need it. Thus, a school can be 'special' for one student but not for another." The IRS ruled that, based on the taxpayers' representations, that the children were attending School X principally to receive medical care in the form of special education in those years each child is diagnosed as having a medical condition that handicaps that child's ability to learn.

Thus, a school doesn't have to be attended exclusively by children with learning disabilities in order for tuition to be deductible if the other criteria are met--for just those learning-disabled children who participate in a special program in a regular school -- as long as participation in that program is their principal reason for attending the school.

Caution. A letter ruling is directed only to the taxpayer requesting it. It may not be used or cited as precedent, but it is a useful illustration of the IRS's thinking.

http://www.irs.gov/pub/irs-wd/0521003.pdf
June 23, 2005

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 Rev. Rul. 78-340

1978-2 C.B. 124

Sec. 213

IRS Headnote:
Medical expenses; tuition or tutoring fees. A taxpayer whose child has severe learning disabilities caused by a neurological disorder may deduct as a medical expense amounts paid upon recommendation of the child's doctor for tuition fees for the child's education at a special school that has a program designed to educate children with such disabilities so that they can return to a regular school within a few years. If recommended by the doctor, amounts paid for the child's tutoring by a teacher specially trained and qualified to deal with severe learning disabilities may also be deducted.

Full Text

Rev. Rul. 78-340

A taxpayer is the parent of a minor child who has been diagnosed as having severe learning disabilities. The symptoms include congenital impairment in the areas of visual memory and visual matching. As a result, the child has great difficulty learning to read. Competent medical authorities who have examined the child have determined that the learning disabilities are caused by a neurological disorder. The child's doctor recommended that the child attend a special school, as defined in section 1.213-1(e)(1)(v)(a) of the Income Tax Regulations, that has a program designed to educate children with severe learning disabilities so that they can return to a regular school within a few years. The taxpayer placed the child in the special school and paid the tuition fees.

Held, amounts paid by the taxpayer for tuition fees for the child's education at the special school are expenses for the child's medical care and are deductible by the taxpayer in the manner and to the extent provided by section 213 of the Internal Revenue Code of 1954.

This holding would also apply to amounts paid by the same taxpayer for the child's tutoring by a teacher who is specially trained and qualified to deal with severe learning disabilities provided the child's doctor recommended such tutoring.

Compare Rev. Rul. 69-607, 1969-2 C.B. 40, which holds that amounts paid by a taxpayer for language training for a child to correct a condition caused by congenital damage to the brain are amounts paid for medical care under section 213 of the Code.

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 Rev. Rul. 69-607

1969-2 C.B. 40

Sec. 213

IRS Headnote
Amounts paid by a taxpayer for language training for his child to correct a condition caused by congenital damage to the brain are amounts paid for medical care under section 213 of the Code.

Full Text

Rev. Rul. 69-607

Advice has been requested whether amounts paid by a taxpayer for language training for his child, to correct a condition known as dyslexia, are amounts paid for medical care within the meaning of section 213 of the Internal Revenue Code of 1954.

It was determined by recognized testing methods that the taxpayer's child was severely deficient in reading ability while his general intelligence was within the normal range for a child of his age. The child was given a comprehensive examination by a neurological pediatrician who identified the child's condition as dyslexia which in this case was caused by congenital damage to the brain, and recommended remedial reading courses to correct the condition.

The taxpayer arranged for the child to receive training from a teacher who was specially trained and qualified to teach remedial reading to mitigate the dyslectic condition. He was required to pay a specified fee for this instruction.

Section 213(a) of the Code allows as a deduction amounts paid during the taxable year, not compensated for by insurance or otherwise, for medical care of the taxpayer, his spouse, or a dependent, subject to certain limitations.

The term "medical care" is defined, in part, in section 213(e)(1) of the Code as meaning 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."

Section 1.213-1(e)(1)(ii) of the Income Tax Regulations provides, in part, that deductions for expenditures for medical care allowable under section 213 of the Code are confined strictly to expenses incurred primarily for the prevention or alleviation of a physical or mental defect or illness.

Since the evaluation made by the medical specialist in the instant case established that the child's dyslexia in this case was caused by brain damage, the child has a "physical or mental defect or illness" within the meaning of section 1.213-1(e)(1)(ii) of the regulations.

Accordingly, the amounts paid by the taxpayer in this case for training for his child are amounts paid for medical care within the meaning of section 213 of the Code.
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Rev. Rul. 71-281 (Legal Fees may be deductible)

1971-2 C.B. 165

Section 213 -- Medical Expense Deduction

Caution: Distinguished by Rev. Rul. 78-266

IRS Headnote
The Revenue Service will follow the Carl A. Gerstacker decision that legal fees necessary to authorize medical treatment for mental illness are deductible medical expenses;  Revenue Ruling 68-320 revoked.

Full Text

Rev. Rul. 71-281

The Internal Revenue Service has reconsidered its position announced in Revenue Ruling 68-320, C.B. 1968-1, 93, that legal fees paid by a taxpayer in connection with the commitment of his son to a state mental institution are not amounts paid for medical care within the meaning of section 213 of the Internal Revenue Code of 1954.

In Revenue Ruling 68-320 the taxpayer's son suffered a severe mental breakdown making it necessary for him to leave college and be hospitalized. Because the taxpayer considered it necessary to have the boy confined in order to treat him, he took the necessary steps to have him committed to a state mental institution. He paid attorney's fees in connection with the commitment, and deducted such amounts as medical expenses under section 213 of the Code. Although not specifically stated in  Revenue Ruling 68-320, it was understood that the commitment proceeding was necessary to render medical treatment to the taxpayer's son, and that the doctors who recommended that the son be committed regarded the compulsory confinement as a necessary part of his therapy.

The term "medical care" is defined in section 213(e)(1) of the Code as meaning amounts paid--

(A) for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body,
(B) for transportation primarily for and essential to medical care referred to in subparagraph (A), or
(C) for insurance * * * covering medical care referred to in subparagraphs (A) and (B).

In holding that the legal fees paid by the taxpayer in connection with the commitment of his son to the state mental institution were not amounts paid for medical care within the meaning of section 213(e)(1) of the Code, the Revenue Ruling relied, in part, on the case of Carl A. Gerstacker v. Commissioner, 49 T.C. 522 (1968).

The facts in the Gerstacker case disclosed that the taxpayer's wife had a history of mental and emotional problems involving violent behavior and alcoholism and that she ran away from two mental institutions after voluntarily entering them. Her doctors advised her that she could not be successfully treated unless she were committed in order that the treatment be continuous. The question presented was whether the taxpayer was entitled to deduct as a medical expense under section 213 of the Code, amounts paid for legal services relating to guardianship proceedings for the taxpayer's wife which enabled her to receive treatment at a sanitarium for her mental and emotional condition. The court held that the legal expenses were not deductible as medical expenses and stated that the provisions of section 213(e)(1) of the Code must be narrowly construed and that a sharp distinction be made between direct and indirect expenses relating to medical care.

However, the position of the Tax Court of the United States in the Gerstacker case was reversed by the United States Court of Appeals for the Sixth Circuit, 414 F. 2d 448 (1969). The Court observed that the compulsory confinement of the taxpayer's wife was a part of her therapy and, hence, there was a direct or proximate relationship between a part of the legal expenses and the treatment. Accordingly, the Court held that where legal expenses are necessary to authorize a method of medical treatment for mental illness, they are "amounts paid * * * for the diagnosis, cure, mitigation, treatment, * * * of disease" and are deductible under section 213 of the Code as expenses for "medical care." The Court further held, however, that legal fees attributable to the management of the guardianship estate, and the legal fees for the conduct of the affairs of the taxpayer's wife during the guardianship are not deductible as expenses paid for "medical care" under section 213 of the Code.

The Internal Revenue Service will follow the decision of the Court of Appeals for the Sixth Circuit in the Gerstacker case. Accordingly, Revenue Ruling 68-320 is hereby revoked.

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 Update::  See also 2008 letter: direct relationship between fees for guardianship and medical treatment.

Note the following adverse rulings:

The deductible cost of maintaining a disabled child at a special school does not include the cost of legal fees incurred in an unsuccessful attempt to force the local public school district to pay the child's tuition at the special school. Lenn v. Commissioner, T.C. Memo. 1998-85.

Rev. Rul. 78-266 -- Indirect costs not deductible

1978-2 C.B. 123
Sec. 213
Sec. 262

IRS Headnote
Medical expenses; child care during visit to physician. Amounts paid by a taxpayer for the care of taxpayer's children to enable the taxpayer to visit a physician for medical treatment are personal expenses not deductible as medical expenses under section 213 of the Code; Rev. Rul. 71-281 distinguished.

Full Text - Rev. Rul. 78-266

Advice has been requested whether, under the circumstances described below, a medical expense deduction is allowable to a taxpayer for amounts paid for care of the taxpayer's children to enable the taxpayer to visit a physician for medical treatment.

The taxpayer, B, has an ailment that requires treatment in a physician's office twice weekly on a regular basis. B is the parent of three normal, healthy children under six years of age. B hires a baby sitter to care for the children each time B goes to the physician's office and receives medical treatment.

Section 262 of the Internal Revenue Code of 1954 states that, except as otherwise expressly provided, no deduction shall be allowed for personal, living, or family expenses.

Section 213(a) of the Code allows, subject to certain limitations not relevant here, a deduction for expenses paid during the taxable year, not compensated for by insurance or otherwise, for the medical care of the taxpayer or the taxpayer's spouse or dependents.

Section 213(e) of the Code defines the term "medical care" as 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; for insurance covering such medical care; or for transportation primarily for and essential to medical care.

Section 1.213-1(e)(1)(ii) of the Income Tax Regulations provides that deductions for expenditures for medical care allowable under section 213 will be confined strictly to expenses incurred primarily for the prevention or alleviation of a physical or mental defect or illness.

The courts have denied a medical expense deduction for expenses that are not directly for medical care, even though the expense may have some relation to medical care. For example, in Ochs v. Commissioner, 195 F.2d 692 (2d Cir. 1952), cert. denied, 344 U.S. 827 (1952), a deduction was denied for expenditures incurred to send the taxpayer's children to a boarding school on a physician's advice to alleviate the taxpayer's spouse's suffering from throat cancer that required her to rest her voice. In McVicker v. United States, 194 F. Supp. 607 (S.D. Cal. 1961), a deduction was denied for the taxpayers' payments to a domestic servant hired on a physician's advice that housework would cause a relapse of the taxpayer-wife's illness. In Wendell v. Commissioner, 12 T.C. 161 (1949), a medical expense deduction was denied for salaries paid to practical nurses employed to care for a child whose mother died at childbirth, the child being normal and having no unusual illness.

In Gerstacker v. Commissioner, 414 F.2d 448 (6th Cir. 1969), the court permitted a medical expense deduction for legal expenses necessary to establish guardianship for the taxpayer's wife, a mental patient, in order to keep her in a mental institution for care. Rev. Rul. 71-281, 1971-2 C.B. 165, announces that the Internal Revenue Service will follow Gerstacker. The facts in the instant care are distinguishable from Gerstacker and Rev. Rul. 71-281 because in Gerstacker the expense was essential to the medical treatment of the person for whom the expense was incurred in that the payment for legal services for the taxpayer's wife was made to obtain the medical treatment.

In the instant case, as in Ochs, McVicker, and Wendell, the expenditures for the care of B's children are not expenses for medical care, even though the expenditures have some relation to medical care. Accordingly, a medical expense deduction is not allowable to B for amounts paid for the care of B's children to enable B to visit a physician for medical treatment. Such expenditures are personal expenses within the meaning of section 262 of the Code and, therefore, are nondeductible.

Rev. Rul. 73-597, 1973-2 C.B. 69, similarly denies a charitable contributions deduction under section 170 of the Code for amounts paid for a baby sitter to care for the taxpayers' children to enable the taxpayer to perform gratuitous services for a charitable organization to which contributions are deductible.

Rev. Rul. 71-281 is distinguished.

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IRS Publication 502- excerpts

http://www.irs.gov/formspubs/page/0,,id=11563,00.html    (link to full document)
http://www.irs.gov/publications/p502/index.html (newer link)

Some relevant portions copied here:

• Disabled Dependent Care Expenses
• Learning Disability
• Schools and Education, Special
• Therapy and Patterning Exercises
• Legal Fees

Disabled Dependent Care Expenses

Some disabled dependent care expenses may qualify as medical expenses or as work-related expenses for purposes of taking a credit for dependent care. You can choose to apply them either way as long as you do not use the same expenses to claim both a credit and a medical expense deduction.

Learning Disability

You can include in medical expenses tuition fees you pay to a special school for a child who has severe learning disabilities caused by mental or physical impairments, including nervous system disorders. Your doctor must recommend that the child attend the school. See Schools and Education, Special, later.

You can also include tutoring fees you pay on your doctor's recommendation for the child's tutoring by a teacher who is specially trained and qualified to work with children who have severe learning disabilities.

Schools and Education, Special

You can include in medical expenses payments to a special school for a mentally impaired or physically disabled person if the main reason for using the school is its resources for relieving the disability. You can include, for example, the cost of:

• Teaching Braille to a visually impaired child,
• Teaching lip reading to a hearing impaired child, or
• Giving remedial language training to correct a condition caused by a birth defect.

The cost of meals, lodging, and ordinary education supplied by a special school can be included in medical expenses only if the main reason for the child's being there is the resources the school has for relieving the mental or physical disability.

You cannot include in medical expenses the cost of sending a problem child to a special school for benefits the child may get from the course of study and the disciplinary methods.

Therapy

You can include in medical expenses amounts you pay for therapy you receive as medical treatment.
“Patterning” exercises. You can include in medical expenses amounts you pay to an individual for giving “patterning” exercises to a mentally retarded child. These exercises consist mainly of coordinated physical manipulation of the child’s arms and legs to imitate crawling and other normal movements.

Legal Fees

You can include in medical expenses legal fees you paid that are necessary to authorize treatment for mental illness.  However, you cannot include in medical expenses fees for the management of a guardianship estate, fees for conducting the affairs of the person being treated, or other fees that are not necessary for medical care.

[Note: In 2008, the IRS allowed the deduction of legal fees to establishment of a guardianship when the purpose of the proceeding was directly related to the provision of medical treatment.  2008-0033.]

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Internal Revenue Service Regulations, 26 CFR 1.213-1

While ordinary education is not medical care, the cost of medical care includes the cost of attending a special school for a mentally or physically handicapped individual, if his condition is such that the resources of the institution for alleviating such mental or physical handicap are a principal reason for his presence there. In such a case, the cost of attending such a special school will include the cost of meals and lodging, if supplied, and the cost of ordinary education furnished which is incidental to the special services furnished by the school. Thus, the cost of medical care includes the cost of attending a special school designed to compensate for or overcome a physical handicap, in order to qualify the individual for future normal education or for normal living, such as a school for the teaching of braille or lip reading. Similarly, the cost of care and supervision, or of treatment and training, of a mentally retarded or physically handicapped individual at an institution is within the meaning of the term medical care.

link to full text IRS Regulations on section 213 deductibility 26 CFR 1.213-1 (details, details)
     Contains examples of how to calculate the deduction.  Definitions start in 1.213-1(e).

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Dependent and Child Care Credit

This credit is better than a deduction since it is a credit to your taxes instead of a reduction of taxable income.  It is designed to reimburse parents who work for costs of child care while the parents work.  Credits average about $600 but can go as high as $2,100.  The calculation is based on your expenses of $3,000 for one child and $6,000 for two or more children.

Ordinarily the credit is available only for children under the age of 13, but the credit is available to a dependent of any age who is "physically or mentally not able to care for himself," namely: "Persons who cannot dress, clean, or feed themselves because of physical or mental problems are considered not able to care for themselves. Also, persons who must have constant attention to prevent them from injuring themselves or others are considered not able to care for themselves."

You can include costs of outside day care, after-school programs and in-house care.
For details see IRS Publication 503.

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Section 213. Medical, dental, etc., expenses  (Full text)

    (a) Allowance of deduction
      There shall be allowed as a deduction the expenses paid during
    the taxable year, not compensated for by insurance or otherwise,
    for medical care of the taxpayer, his spouse, or a dependent (as
    defined in section 152), to the extent that such expenses exceed
    7.5 percent of adjusted gross income.
    (b) Limitation with respect to medicine and drugs
      An amount paid during the taxable year for medicine or a drug
    shall be taken into account under subsection (a) only if such
    medicine or drug is a prescribed drug or is insulin.
    (c) Special rule for decedents
      (1) Treatment of expenses paid after death
        For purposes of subsection (a), expenses for the medical care
      of the taxpayer which are paid out of his estate during the
      1-year period beginning with the day after the date of his death
      shall be treated as paid by the taxpayer at the time incurred.
      (2) Limitation
        Paragraph (1) shall not apply if the amount paid is allowable
      under section 2053 as a deduction in computing the taxable estate
      of the decedent, but this paragraph shall not apply if (within
      the time and in the manner and form prescribed by the Secretary)
      there is filed -
          (A) a statement that such amount has not been allowed as a
        deduction under section 2053, and
          (B) a waiver of the right to have such amount allowed at any
        time as a deduction under section 2053.
    (d) Definitions
      For purposes of this section -
        (1) The term ''medical care'' means amounts paid -
          (A) for the diagnosis, cure, mitigation, treatment, or
        prevention of disease, or for the purpose of affecting any
        structure or function of the body,
          (B) for transportation primarily for and essential to medical
        care referred to in subparagraph (A),
          (C) for qualified long-term care services (as defined in
        section 7702B(c)), or
          (D) for insurance (including amounts paid as premiums under
        part B of title XVIII of the Social Security Act, relating to
        supplementary medical insurance for the aged) covering medical
        care referred to in subparagraphs (A) and (B) or for any
        qualified long-term care insurance contract (as defined in
        section 7702B(b)).
      In the case of a qualified long-term care insurance contract (as
      defined in section 7702B(b)), only eligible long-term care
      premiums (as defined in paragraph (10)) shall be taken into
      account under subparagraph (D).
        (2) Amounts paid for certain lodging away from home treated as
      paid for medical care. - Amounts paid for lodging (not lavish or
      extravagant under the circumstances) while away from home
      primarily for and essential to medical care referred to in
      paragraph (1)(A) shall be treated as amounts paid for medical
      care if -
          (A) the medical care referred to in paragraph (1)(A) is
        provided by a physician in a licensed hospital (or in a medical
        care facility which is related to, or the equivalent of, a
        licensed hospital), and
          (B) there is no significant element of personal pleasure,
        recreation, or vacation in the travel away from home.
      The amount taken into account under the preceding sentence shall
      not exceed $50 for each night for each individual.
        (3) Prescribed drug. - The term ''prescribed drug'' means a
      drug or biological which requires a prescription of a physician
      for its use by an individual.
        (4) Physician. - The term ''physician'' has the meaning given
      to such term by section 1861(r) of the Social Security Act (42
      U.S.C. 1395x(r)).
        (5) Special rule in the case of child of divorced parents, etc.
      - Any child to whom section 152(e) applies shall be treated as a
      dependent of both parents for purposes of this section.
        (6) In the case of an insurance contract under which amounts
      are payable for other than medical care referred to in
      subparagraphs (A), (B), and (C) of paragraph (1) -
          (A) no amount shall be treated as paid for insurance to which
        paragraph (1)(D) applies unless the charge for such insurance
        is either separately stated in the contract, or furnished to
        the policyholder by the insurance company in a separate
        statement,
          (B) the amount taken into account as the amount paid for such
        insurance shall not exceed such charge, and
          (C) no amount shall be treated as paid for such insurance if
        the amount specified in the contract (or furnished to the
        policyholder by the insurance company in a separate statement)
        as the charge for such insurance is unreasonably large in
        relation to the total charges under the contract.
        (7) Subject to the limitations of paragraph (6), premiums paid
      during the taxable year by a taxpayer before he attains the age
      of 65 for insurance covering medical care (within the meaning of
      subparagraphs (A), (B), and (C) of paragraph (1)) for the
      taxpayer, his spouse, or a dependent after the taxpayer attains
      the age of 65 shall be treated as expenses paid during the
      taxable year for insurance which constitutes medical care if
      premiums for such insurance are payable (on a level payment
      basis) under the contract for a period of 10 years or more or
      until the year in which the taxpayer attains the age of 65 (but
      in no case for a period of less than 5 years).
        (8) The determination of whether an individual is married at
      any time during the taxable year shall be made in accordance with
      the provisions of section 6013(d) (relating to determination of
      status as husband and wife).
        (9) Cosmetic surgery. -
          (A) In general. - The term ''medical care'' does not include
        cosmetic surgery or other similar procedures, unless the
        surgery or procedure is necessary to ameliorate a deformity
        arising from, or directly related to, a congenital abnormality,
        a personal injury resulting from an accident or trauma, or
        disfiguring disease.
          (B) Cosmetic surgery defined. - For purposes of this
        paragraph, the term ''cosmetic surgery'' means any procedure
        which is directed at improving the patient's appearance and
        does not meaningfully promote the proper function of the body
        or prevent or treat illness or disease.
        (10) Eligible long-term care premiums. -
          (A) In general. - For purposes of this section, the term
        ''eligible long-term care premiums'' means the amount paid
        during a taxable year for any qualified long-term care
        insurance contract (as defined in section 7702B(b)) covering an
        individual, to the extent such amount does not exceed the
        limitation determined under the following table:
     In the case of an individual   with an attained age before the
   The limitation
     close of the taxable year of:                                   is:
           40 or less                                             $ 200
           More than 40 but not more than 50                         375
           More than 50 but not more than 60                         750
           More than 60 but not more than 70                       2,000
           More than 70                                          2,500 .
          (B) Indexing. -
            (i) In general. - In the case of any taxable year beginning
          in a calendar year after 1997, each dollar amount contained
          in subparagraph (A) shall be increased by the medical care
          cost adjustment of such amount for such calendar year.  If
          any increase determined under the preceding sentence is not a
          multiple of $10, such increase shall be rounded to the
          nearest multiple of $10.
            (ii) Medical care cost adjustment. - For purposes of clause
          (i), the medical care cost adjustment for any calendar year
          is the percentage (if any) by which -
              (I) the medical care component of the Consumer Price
            Index (as defined in section 1(f)(5)) for August of the
            preceding calendar year, exceeds
              (II) such component for August of 1996.
         The Secretary shall, in consultation with the Secretary of
          Health and Human Services, prescribe an adjustment which the
          Secretary determines is more appropriate for purposes of this
          paragraph than the adjustment described in the preceding
          sentence, and the adjustment so prescribed shall apply in
          lieu of the adjustment described in the preceding sentence.
        (11) Certain payments to relatives treated as not paid for
      medical care. - An amount paid for a qualified long-term care
      service (as defined in section 7702B(c)) provided to an
      individual shall be treated as not paid for medical care if such
      service is provided -
          (A) by the spouse of the individual or by a relative
        (directly or through a partnership, corporation, or other
        entity) unless the service is provided by a licensed
        professional with respect to such service, or
          (B) by a corporation or partnership which is related (within
        the meaning of section 267(b) or 707(b)) to the individual.
      For purposes of this paragraph, the term ''relative'' means an
      individual bearing a relationship to the individual which is
      described in any of paragraphs (1) through (8) of section 152(a).
      This paragraph shall not apply for purposes of section 105(b)
      with respect to reimbursements through insurance.
    (e) Exclusion of amounts allowed for care of certain dependents
      Any expense allowed as a credit under section 21 shall not be
    treated as an expense paid for medical care. top

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taxpayer may rely only on formal written advice meeting specific requirements to
avoid federal tax penalties. Any tax advice in the text of this message, or in any
attachment, does not meet those requirements and, accordingly, is not intended or
written to be used, and cannot be used, by any recipient to avoid any penalties that
may be imposed upon such recipient by the Internal Revenue Service. 

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This page lists articles of interest to parents of children with disabilities.  We hope you are able to use the information here as a start to getting a little bit more help for your childre.  Please remember that tax laws are complicated and it is best if you  consult your tax professional if you have any questions.  Nothing here creates an attorney-client relationship.

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