With all of these to consider, we are always looking for ways to stretch our finances and our resources, as far as we can. Although taxes was not one of the first things I listed above, understanding financial credits, deductions, and different savings options available to families and to our children can make a difference. As a parent to a child with special needs, I have learned firsthand how important it is to be proactive about financial planning. Small steps, like contributing to our daughter’s Bright Star account, as well as paying attention to the timing of our expenses, have helped us maximize the resources we have. Here are a few tax strategies we learned, that other families may find useful.
Know Which Credits You Qualify For
Each Spring, my husband sits down to do our taxes. I am always in awe of the credits that are available to families that can help ease the financial burden of raising children, as well as children with disabilities. One tax credit available to all parents is the Child and Dependent Care Credit. For this, if you are paying for after-school programming, summer camps, or other childcare so that you can work and continue to contribute to your household income, you may be eligible for this credit. For our family, this has been an important deduction each year. The Earned Income Tax Credit (also seen as EITC) is also another credit that families may apply for. For the EITC, families with lower to moderate income may qualify, even if their child is over a designated age limit, provided that a child has a qualifying disability. Also available to families is the Child Tax Credit, which is available to many families. Eligibility rules permit parents of children with disabilities to continue claiming this tax credit in certain circumstances.
Many medical expenses related to a child’s disability can be deducted if those paid expenses exceed a certain percentage of your income. Those expenses can include therapy (speech, occupational, physical, and behavioral). Expenses can include transportation to and from appointments, and mileage can add up quickly. Deductable expenses can also consist of adaptive equipment, like communication devices and sensory tools needed for your child. Some larger expenses may also be included, like home modifications for accessibility: wheelchair ramps, widened doorways, and grab bars for safety and independence. Keeping track of these expenses takes organization, but keeping those receipts and mileage logs throughout the year will make tax season significantly less stressful.
ABLE accounts (ABLE stands for Achieving a Better Life Experience) are something that many families can benefit from. An ABLE account allows for tax-free savings for various disability-related expenses without effecting government benefits. This federal program is open to families in any state, and at this time, the account owner must have a disability that began before age 26 (this age is rumored to change in 2026). Adding funds into an ABLE account helps money grow tax-free. Withdrawals for disability expenses are also tax-free. A similar program is the Bright Star 529 plan, which supports future educational needs. While the specifics of the programs differ, both options offer tax advantages that can ease long-term planning. If relatives want to give gifts to your child, these accounts are great alternatives to toys or cash, since both accounts have ways that others can make deposits directly into the account and contribute to your child’s future.
One lesson that I have learned is that, even though some things cannot be anticipated, timing does matter when it comes to expenses. Some expenditures, such as appointments and therapy costs, can be planned before the end of a calendar year to help you maximize deductions. For example, if your family knows a therapy program is scheduled for January, you may consider paying for it during the month of December if it helps your family meet the threshold for medical deductions. Likewise, the planning of larger purchases like adaptive equipment can be the difference between qualifying for a deduction or not.
Partner with a Professional
One of the most important lessons that I have learned is that families do not have to walk this journey alone. Tax law is complicated, and when you add in the unique challenges of raising a child with disabilities, taxes can be even more challenging. Finding a tax professional or a financial advisor who understands special needs can be a game-changer.
A knowledgeable advisor can:
- Check to ensure you claim every credit and deduction you and your family qualify for. Many families miss out on the Dependent Care Credit or mileage to therapy appointments, simply because they didn’t know it counted.
- Help you navigate ABLE accounts and 529 plans. Regular contributions, rollovers, and withdrawals all have rules that can impact your taxes and your child’s benefits. An advisor can help you choose what is best for your family.
- Coordinate with your estate plan. Taxes aren’t just about the current year. Taxes are tied to long-term planning, including guardianship, special needs trusts, and inheritance.
- Keep you updated on changes. Credits and deductions shift as laws change, and a professional can make sure you are taking advantage of the latest updates. Meeting with someone regularly helps you stay informed. This is especially helpful if you decide to make financial changes or your specific finances change.
When searching for help, I recommend looking for:
- Certified Public Accountants (CPAs) with experience in disability-related tax planning.
- Financial planners who specialize in special needs families.
- Nonprofit organizations that offer free or low-cost tax preparation for qualifying families.
For my family, working with someone who understood the complexities of child care credits and long-term planning through our Bright Start account gave us peace of mind. Instead of guessing, we knew we were making the most of what was available to us.
Starting Small : Finding the Right Professional
If you are ready to partner with a tax professional, here are some places to start.
Special Needs Alliance
A national organization of attorneys specializing in disability and public benefits law
www.specialneedsalliance.org
The Academy of Special Needs Planners
A directory of professionals, including lawyers and financial planners, who focus on planning for individuals with special needs.
www.specialneedsanswers.com
National Association of Enrolled Agents
Enrolled Agents are federally licensed tax practitioners who represent taxpayers before the IRS. Visit the site and use the directory to filter for those with family or disability planning expertise for personalized support.
www.naea.org
Local nonprofits and disability organizations
Many state or regional disability councils, ARC chapters, or United Way offices offer referrals to tax prep services knowledgeable about special needs families.
Ask your network
Sometimes the best referrals come from other parents walking the same path. Ask friends, visit social media pages for special needs families in your community, and ask for their referrals. A personal recommendation can go a long way.
Taxes may never feel easy, but that does not mean that taxes have to feel impossible either. By keeping receipts and records of expenses, planning strategically, and using tax credits available, families can reduce some of the financial stress that comes with supporting a child with disabilities. When tax season arrives, strategies that we take are more than just numbers on our tax forms. These strategies are tools that help provide the care, therapies, and the experiences that our children need to grow and thrive.
ABOUT THE AUTHOR:
Christina Kreml (MA. Ed.) is a dedicated special education teacher with two advanced degrees and a passion for supporting children with disabilities. As a parent to a special needs daughter, Christina brings both professional expertise and personal experience into her advocacy work. She is committed to empowering families, championing the rights of children with disabilities, and helping parents navigate the journey of raising exceptional children. You can connect with her at www.iepclarity.com.
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