Are There Tax Deductions for Disabled Children and Adopted Children?

The costs of adopting a child or caring for a disabled child can be overwhelming. The IRS offers numerous tax credits for families in a variety of situations, and you may be able to claim deductions on your tax returns to reduce your income tax liability.

Child Tax Credit

Parents of adopted or disabled children may take advantage of the Child Tax Credit. As of 2012, parents are eligible for a tax credit of $1,000 per child. You don't have to provide any special documentation, simply check the appropriate box on your 1040 form. Your child must be under the age of 16 at the end of the tax year for you to claim this credit.

Adopted Child Deduction

Adopting a child can be an expensive process, and the IRS allows parents to take a tax deduction for each newly adopted child. You may deduct the expenses associated with the child's adoption including transportation and adoption fees. The IRS also encourages the adoption of special needs children by offering a tax credit that may exceed the amount parents can deduct in adoption costs. As of 2012, the credit was $13,360 per adopted special needs child.

Disabled Child Deductions

You can deduct medical expenses associated with your special needs child from your taxes. Medical expenses include medications, occupational therapy, psychological evaluations, medical appointments and most other expenses designed to treat the disability. If your child attends a school for special needs children, you may also be able to deduct the cost of tuition. These expenses must be itemized on Schedule A of your tax return.

Tax Planning

While the IRS recognizes that adoption is expensive and that caring for special needs children often requires significant financial investment, deducting large amounts of money from your taxes can subject you to an audit. Document your expenses and save your receipts. If you have a large volume of expenses, you may want to consult an accountant, who can help you determine what is and is not eligible for a deduction or credit.

About the Author

Van Thompson is an attorney and writer. A former martial arts instructor, he holds bachelor's degrees in music and computer science from Westchester University, and a juris doctor from Georgia State University. He is the recipient of numerous writing awards, including a 2009 CALI Legal Writing Award.

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