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Deduction Information

In letter ruling 200521003, the IRS held that tuition paid to a school program to help dyslexic children deal with their condition was an IRC section 213(a) deductible medical expense. The ruling broadens—albeit slightly—the definition of the kinds of payments that qualify as deductible medical costs. CPAs, however, should be aware of the ruling’s inherent limits and be prepared to address the other restrictions on the medical deduction.


In the ruling, the taxpayers’ two children were diagnosed with disabilities caused by medical conditions (including dyslexia) that handicapped their ability to learn. The taxpayers enrolled the children in a school that provided them with special education designed to enable them to cope.


The IRS first explained that “normal education” is not medical care, because it is not designed to overcome a medical disability. For education to be considered medical care, a physician or other qualified professional must diagnose a medical condition that requires special education to correct it. Although a school need not hire doctors, it must have professional staff competent to design and supervise a curriculum providing such care. Overcoming the disability must be a primary reason for the child’s attending the school; any ordinary education received must be incidental to that.

The IRS ruled that the children were attending the school principally to receive medical care in the form of special education in the years they were diagnosed as having a medical condition that hindered their ability to learn. Thus, the taxpayers can deduct tuition as a section 213(a) medical expense for the years the children continue to be diagnosed as medically handicapped. Citing revenue ruling 69-607, the IRS further held that dyslexia could be sufficiently severe as to be such a handicap.

This ruling expands the types of tuition payments that may be deductible as medical expenses. It refutes the presumption that educational institutions must be “special schools” for their tuition to be deductible. It confirms that tuition for programs designed to enable dependents to deal with a diagnosed medical handicap—such as dyslexia—qualifies as a medical deduction, as long as other requirements are met.


Before taxpayers claim tuition as a deduction, however, there are other requirements in letter ruling 200521003:

  • Medical care must be a principal purpose for attending the institution.
  • The institution’s program must be designed and administered by qualified professionals for the purposes of treating the dependent’s medical condition.
  • Ordinary education must be incidental.

Further, medical expenses are deductible only to the extent they exceed 7.5% of the taxpayer’s adjusted gross income. Finally, letter rulings apply only to the taxpayer who obtained the ruling; they are not precedential. However, they do show the service’s thinking on a particular issue.

For more information, see the Tax Clinic, edited by Joel Ackerman, in the October 2005 issue of The Tax Adviser.
—Lesli S. Laffie, editor
The Tax Adviser
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