Autism Parent Resources

Back to library

Tax Benefits for Autism Families

  • Getting Started

Managing the financial aspects of caring for a loved one with autism can be challenging. For many families, these expenses go far beyond what private insurance covers, leaving gaps that can feel overwhelming. Fortunately, there are various tax deductions and credits available that may help offset some of these costs. Understanding and utilizing these tax benefits can provide significant financial relief, allowing you to allocate more resources to your loved one’s care and well-being.

Why Understanding Tax Benefits is Important

Tax benefits can reduce your overall tax liability, effectively putting more money back into your pocket that can be used for therapies, medical expenses, specialized equipment, or other disability-related needs. Proper documentation and planning may lead to substantial savings that can make a real difference in your family’s ability to access necessary services.

Key Tax Benefits to Explore

1. Medical Expense Deductions

  • What it is: You may be able to deduct medical expenses that exceed a certain percentage of your Adjusted Gross Income (AGI). This can include a wide range of autism-related costs, such as therapy (ABA, speech, occupational, or physical therapy), special education tuition (if medically necessary), prescription medications, specialized equipment, and certain travel expenses for medical care.
  • Action: Keep meticulous records of all medical expenses, including receipts, invoices, and explanations of benefits from your insurance. Consult IRS Publication 502 for a comprehensive list of deductible medical expenses. Even seemingly small expenses can add up significantly over the year.

2. Child and Dependent Care Tax Credit

  • What it is: If you pay for care for a qualifying child (including a child with a disability) so that you can work or look for work, you may be able to claim the Child and Dependent Care Credit. This credit can apply even if your child is over the typical age limit, as long as they have a qualifying disability.
  • Action: Ensure your child meets the IRS definition of a “qualifying individual” and keep detailed records of all care expenses, including daycare, after-school programs, and respite care services.

3. Earned Income Tax Credit (EITC)

  • What it is: The EITC is a refundable tax credit for low-to-moderate income working individuals and families. For families with a qualifying child who has a “permanent and total disability”, this is a specific IRS tax term, meaning a physical or mental condition that prevents an individual from engaging in any substantial gainful activity, and a doctor certifies it has lasted or is expected to last continuously for at least 12 months or potentially last throughout one’s life. There is not usually an age requirement or restriction for this. This credit can reduce the amount of tax you owe, and you might even get a refund if the credit is more than the tax you owe.
  • Why it’s important: It provides direct financial relief, potentially putting a substantial refund back into your family’s pocket, which can be used for any family needs, including autism-related expenses.
  • Action: Check the IRS website (irs.gov/eitc) to see if you qualify based on your income, filing status, and number of qualifying children. This credit can be complex, so it’s best discussed with a tax professional.

4. ABLE Account Contributions

  • What it is: Contributions made to an ABLE (Achieving a Better Life Experience) account are not tax-deductible at the federal level, but some states offer a state income tax deduction or credit for contributions to an ABLE account. Earnings within an ABLE account grow tax-free, and qualified disability expenses are withdrawn tax-free, making this a powerful long-term savings tool.
  • Action: Research your state’s ABLE program to see if it offers any state-specific tax benefits for contributions. Keep documentation of all contributions and withdrawals, and understand what qualifies as an eligible disability expense.

5. Special Needs Trust (SNT) Planning

  • What it is: While a Special Needs Trust (SNT) itself is not a direct tax deduction, it is a crucial legal and financial planning tool that has significant tax implications for your loved one’s future. Assets held within a properly structured SNT are not considered the beneficiary’s assets for purposes of means-tested government benefits (like SSI or Medicaid), and the trust may offer certain tax advantages.
  • Action: Consult with a special needs attorney to establish an SNT. They can guide you on how assets should be managed within the trust to avoid negative tax consequences and ensure benefit eligibility while maximizing tax efficiency.

6. Work With a Tax Professional Familiar with Disability-Related Deductions

  • Why it’s important: Tax laws are complex, and the rules for disability-related deductions and credits can be particularly intricate. A tax professional specializing in this area can identify all eligible deductions, ensure you maximize your benefits, and help you avoid costly mistakes.
  • Action: Do a web search for “tax professional special needs [your city/state]” or “CPA disability tax planning [your city/state].” Be prepared to provide them with all your financial and medical records. The investment in professional guidance often pays for itself through increased savings. Don’t pick the first one you contact, it’s best to contact a few and ask questions to find the best fit for you and your family.

Tips for Success

  • Keep meticulous records: This cannot be stressed enough. For all potential deductions and credits, you will need detailed documentation. Create a dedicated folder or digital file for all autism-related expenses. Consider using expense tracking apps or spreadsheets to stay organized throughout the year.
  • Stay informed: Tax laws can change, and new benefits may become available. Regularly check IRS publications and consult with your tax professional to stay updated on new benefits or changes to existing ones. Join autism parent groups where families often share tax tips and updates.
  • Start planning early: Don’t wait until tax season to organize your records. Maintain documentation throughout the year to ensure you don’t miss any potential deductions. This also makes tax preparation much less stressful.
  • Don’t leave money on the table: Many families miss out on valuable tax benefits simply because they are unaware of them. Proactive research and professional consultation can make a significant difference in your family’s financial well-being.
  • Consider timing: Sometimes the timing of expenses or purchases can impact your tax benefits. Discuss strategies with your tax professional about when to incur certain expenses for maximum tax advantage.

By understanding and utilizing these tax benefits, you can alleviate some of the financial pressures associated with autism care, allowing you to focus more on your loved one’s well-being. Remember, every dollar saved on taxes is another dollar that can go toward therapies, equipment, or services that improve your family member’s quality of life. It’s an empowering financial tool in your autism care planning that no family should overlook.

Disclaimer: This information is for educational and informational purposes only and is not intended as a substitute for professional medical, legal, tax, or financial advice. Every child and family’s situation is unique, and specific tax laws, eligibility criteria, and financial circumstances vary widely and can change. Always consult with a qualified tax professional (such as a CPA) or a certified financial advisor for advice tailored to your individual situation. While we aim to provide helpful guidance, this content does not constitute personalized professional advice, and your family’s safety and financial well-being must always come first.