Are the costs of ABA therapy deductible as a medical expense?

I approach answering this question with some trepidation. I have not found a clear-cut answer, and there are aspects of ABA (applied behavioral analysis) therapy with which I am not familiar. Therefore, I am going to put some disclaimers directly into this post:

I. IRS Circular 230 Disclaimer

NOTHING in this post is intended or written to be used for the purpose of avoiding Federal Tax penalties, and it cannot be used by the reader or any taxpayer to avoid Federal Tax penalties, and this post was not written to support the promotion or marketing of any transaction or matter discussed in it.

II. Consult Your Tax Advisor

This is not legal advice that you can use in any way. Consult your tax advisor about whether you can or should take this as a medical deduction.

III. This does not create an attorney-client relationship.

Now, back to the question:

It is my belief that ABA therapy does qualify, in whole or in some parts, as an expense that is properly deductible on Schedule A as a medical expense. How much of the therapy you can deduct will depend upon the actual modalities used in your particular situation. The fact that something is called ABA therapy does not necessarily make it "medical" in nature. You might have to look at each particular activity and deduct some but not all activities.

Therapy to diagnose, cure, mitigate, treat, or prevent a disease or for the purpose of affecting any structure or function of the body, is deductible as a medical expense. Based upon my understanding of ABA therapy, the premise of ABA therapy would qualify under this test for deductibility as a medical expense.

UBS Settlement -- We Can Help

If you are or know of someone about to be ensnared in the UBS settlement with the Justice Department, we can help. You are not necessarily destined to go to jail because of the settlement; but you need to act fast.

Call me at 513.563.1595 or e-mail me at info@paulnidich.com ASAP.

Does the IRS Owe You Money?

Who couldn’t use a little extra cash this summer! The IRS may have some money for you.

If you have not filed a prior year tax return and are due a refund, you should consider filing the return to claim that refund. If you are missing a refund for a previously filed tax return, you should contact the IRS to check the status of your refund and confirm your current address.

Unclaimed Refunds

Some people may have had taxes withheld from their wages but were not required to file a tax return because they had too little income. Others may not have had any tax withheld but would be eligible for the refundable Earned Income Tax Credit.

· To collect this money a return must be filed with the IRS no later than three years from the due date of the return.

· If no return is filed to claim the refund within three years, the money becomes the property of the U.S. Treasury.

· There is no penalty assessed by the IRS for filing a late return qualifying for a refund.

· Current and prior year tax forms and instructions are available on the Forms and Publications web page of IRS.gov or by calling 800-TAX-FORM (800-829-3676).

· Information about the Earned Income Tax Credit and how to claim it is also available on the IRS web site, IRS.gov.

Undeliverable Refunds

Were you expecting a refund check but didn't get it?

· Refund checks are mailed to your last known address. Checks are returned to the IRS if you move without notifying the IRS or the U.S. Postal Service.

· You may be able to update your address with the IRS on the “Where’s My Refund?” feature available on IRS.gov. You will be prompted to provide an updated address if there is an undeliverable check outstanding within the last 12 months.

· You can also ensure the IRS has your correct address by filing Form 8822, Change of Address, which is available on IRS.gov or can be ordered by calling 800-TAX-FORM (800-829-3676).

· If you do not have access to the Internet and think you may be missing a refund, you should first check your records or contact your tax preparer. If your refund information appears correct, call the IRS toll-free assistance line at 800-829-1040 to check the status of your refund and confirm your address.

How to Find Your 2008 Stimulus Payment Amount

Everyone who files a 2008 federal income tax return needs to know what he/she/they received as their 2008 Stimulus Payment. If you're like me, you have no idea. Here is an article I wrote that explains how you can obtain this information. How to Find Your 2008 Stimulus Payment Amount.

Do you qualify for the new Making Work Pay tax credit?

The American Recovery and Reinvestment Act of 2009 created a new, refundable personal tax credit for 2009 and 2010. This credit is known as the "Making Work Pay" tax credit. For those who qualify, the credit equals 6.2% or earned income, up to $400 for individuals and $800 for married couples who file jointly.

Most working Americans will qualify for the credit, but nonresident aliens and taxpayers who can be claimed as dependents by someone else do not qualify. A taxpayer must include a valid social security number on your tax return. Couples filing jointly need only to have one valid social security number to qualify.

The other issue to qualify for this credit is your Modified Adjusted Gross Income. If your MAGI is less than $75,000 for individuals or $150,000 for couples filing jointly you qualify for the full amount ofthe credit. If you MAGI falls between $75,000 and $95,000 for individuals, $150,000 and $190,000 for joint filers, your credit will be reduced on a sliding scale. If your MAGI exceeds the top level, you won't qualify for the credit at all.

Also, some people will receive the $250 payments provided by the Act. These individuals, recipients of social security railroad retirement benefits, or veteran benefits, will have their credits reduced by that amount.

The IRS has issued new withholding tables to account for this credit, so you don't have to do anything. When your employer begins using these new withholding tables in the beginning of April, you should see an increase in your take home pay which will continue through the rest of the year.

If, however, you are self-employed and pay estimated taxes through the year, you can either wait until the end of the year to take the credit or reduce your estimated payments to reflect the amount of the credit to which you are entitled.

More information is available on the IRS web site, www.irs.gov.

Flexible Spending Arrangements (FSA)

I posted an article on eHow about Flexible Spending Arrangements (FSA)(aka Flexible spending accounts). The article explains the basic requirements for an FSA, the risks and benefits, the amount of money you can put into the FSA, and the tax treatment of contributions and withdrawals. You can find the article at http://www.ehow.com/how_4821716_arrangement-fsa-maximum-tax-savings.html

UNFILED 2005 RETURNS OWED $1.3 BILLION

The IRS issued a press release on March 2nd calling attention to the fact that people who have not yet filed their 2005 tax returns may be owed as much as $1.3 billion in tax refunds. These unfiled returns must be filed by April 15, 2009, or the possible refunds will be lost forever.

If you are one of these individuals, please take action immediately. If you have lost your W-2s or other tax information, there are ways of getting this information directly from the IRS. Don't let this stand in the way of your getting a refund.

For more information, see the following IRS press release.

Tax Workshop in Cincinnati on 2/26/09

I will be doing a workshop on tax issues for people with disabilities this Thursday, February 26, 2009, from 6:30 pm until 8:00 pm at the Pleasant Ridge Community Center, 5915 Ridge Road.  For more information, or to register, please call or e-mail Sue Schindler at sue@archamilton.org or 513-821-2113 x 112.

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