Did you know that Trident Academy tuition and other education-related medical expenses are tax deductible? Stephanie Spinucci, a CPA with Johnson Lanning, explains everything you need to know.
“The IRS considers it a medical expense if tuition is paid to any program designed to enable children to overcome a learning disability,” Ms. Spinucci explains. “So, if your child is enrolled in a school like Trident Academy, this is a great opportunity!”
Three requirements must be met for education to be considered medical care:
1. A physician or other qualified professional must diagnose a medical condition that requires special education.
2. The school must have a professional staff trained in the curriculum for providing such care.
3. Overcoming the disability must be a primary reason for the child to attend the school.
If your health insurance does not cover related costs, like ABA therapy, psycho-ed evaluations, etc., you can also deduct these costs from your taxes.
Ms. Spinucci adds that it is important to keep in mind that medical expenses are deductible only to the extent they exceed 10 percent of the taxpayer’s adjusted gross income. If someone over the age of 65 (like a grandparent) is paying the tuition, expenses are deductible if they exceed 7.5 percent of the taxpayer’s adjusted gross income.
If your adjusted gross income is $100,000 and you pay $25,000 in tuition, you will see about $4,500 in tax savings. If your adjusted gross income is $150,000 and you pay $25,000 in tuition, you will see about $3,000 in tax savings. See Ms. Spinucci’s calculations below.
To take advantage of this, you must itemize deductions. When itemizing, most people hire a CPA; however, online programs like Turbo Tax can handle this deduction. The program will ask “do you have medical expenses?” and by answering yes, you will be able to input information from your year-end statement. Trident Academy will provide you with a year-end statement, which you will need to do your taxes.
Medical Deduction Example
Taxpayers Adjusted Gross Income $100,000
Tuition paid to Trident Academy $25,000
Ten percent of $100,000 income $10,000
Subtract that 10% from tuition to get your deduction $15,000
Multiply your deduction by 30% (assumed federal and S.C. rates) to get $4,500 in tax savings.
For more information about the medical tax deduction, contact Stephanie Spinucci at Stephanie@johnsonlanning.com or 843.416.8784.
This is not intended as legal or tax advice. Please consult with your attorney or financial planner.