If you’re anything like us, you probably have mixed feelings about tax preparation — you dread having to rummage through drawers to locate all your receipts and paperwork, but you also feel a tinge of excitement about the possibility of a refund. But it doesn’t have to be all bad, especially if you heed the awesome advice of Gina M. Levy, CPA.
Levy began her career at a leading accounting firm and held a variety of accounting management positions in several industries before opening her own tax practice in 2002. The primary focus of her practice is helping families who have children or other family members with disabilities.
In December 2019, Levy wrote this incredibly helpful article, which lays out strategies for preparing your taxes in a way that’s clear and easy to understand. We talked to her to learn what changes have occurred since then and to find out what advice she has for parents.
Levy says the most important thing to note is that you can deduct medical expenses that exceed 7.5% of your adjustable gross income (AGI), and that this number will not change.
Levy’s article includes a thorough list of costs that are considered medical and can be deducted. She says the main updates since the pandemic are related to remote learning: “If you physically changed your home so that your child could more appropriately participate in Zoom classes because of their disability (such as increasing soundproofing or installing special seating), that would be considered a medical expense.”
She added that this also applies to buying noise-canceling headphones or a bouncy ball for them to sit on, noting that you should be working with your doctor and therapist for these recommendations, and that to deduct these costs, you’ll need to have it in writing (for example, “On [X] date, Dr. [X] recommended noise-cancelling headphones to help [X] focus on virtual learning”). “If you don’t already have it in writing, ask your therapists and medical providers for a letter or email to memorialize the recommendations,” Levy says.
Many therapy appointments are now being done remotely from home. Levy tells us that you can deduct whatever you needed to buy, such as therapeutic equipment or toys for OT and speech therapy, so that you have the things your child needs in the home. Again, you’ll need to have the recommendation in writing.
If you’re heard about Proposition 19, which “allows homeowners who are over 55 years of age, disabled, or victims of a wildfire or natural disaster to transfer their assessed value of their primary home to a newly purchased or newly constructed replacement primary residence up to three times,” you may have questions about the legal ramifications for special needs trusts. Levy recommends watching three short videos created by the Dale Law Firm for clarity on these issues. (You can access those videos here, here, and here.)
“Anyone who owns a home and has a child with disabilities under the age of 18 needs to learn about Proposition 19, as it changes the parent/child transfer rules and how you want to plan for inheriting property with a special needs trust,” Levy says, noting that it’s a complicated change and it’s not the same for everybody. The Special Needs Alliance is a great resource for information about financial and property planning.
If you’re a Regional Center client, Levy recommends making sure your IPP includes everything you do for your child: “If you’re audited and the tax person wonders why you’re claiming a medical deduction for the wobble seat your kid sits on, if it’s stated in the IPP that your child needs a OT seat, then that’s medical. Include everything you’re paying for out of pocket so it’s documented — you want your responsibilities to be clearly defined in the IPP.”
If you’re not with a Regional Center, you’ll still want to document everything. “Make sure to take notes when you have your annual visit with your pediatrician, and give your tax person a copy of your notes to show that you’re working with a medical professional,” Levy advises.
For more, be sure to check out Levy’s full article; though she’s not currently taking new clients, she is happy to help on a case by case basis and may also be able to speak with your tax professional.
