Tax Exemptions for Children With Autism

Caring for a child with autism requires parents to provide ongoing emotional and financial support. Autism can prevent children and adults from leading productive lives. Because of the supports needed to care for an autistic child, certain tax exemptions exist for their parents and guardians.

Experts estimate that 6 out of every 1,000 children will develop an autism spectrum disorder, according to the National Institute of Neurological Disorders & Stroke. Autism, the most severe condition within this category, appears as a brain disorder that impairs a child’s ability to communicate, learn and socialize with others. As a result, many children require specialized services in the form of education and daily care.

Federal and state governments recognize the supports needed by parents and guardians to care for the large numbers of children affected by autism. Federal and state tax exemptions allow caretakers to exclude certain portions of their income when filing yearly taxes. These exemptions reduce the overall amount of a family’s yearly tax requirements.

The Internal Revenue Service tax code allows tax filers to use personal exemptions when filing yearly taxes. Tax filers can claim one personal exemption for each person in a household.

As of 2011, each personal exemption acts as a tax deduction equal to $3,650 per year, according to the WorldWideWeb Tax reference site. As such, a child with autism qualifies as a dependent exemption within any given tax year. The IRS defines a dependent as any household member -- relative or non-relative -- who resides within a home for an entire year. To qualify as a personal exemption, dependents must receive most of their financial support from the person claiming the exemption.

Tax filers can claim a relative as a dependent whether or not the dependent lives with them. For parents and guardians of autistic children, personal exemption allowances apply for children who live at home as well as for children living within an institutionalized setting.

For some children, the effects of autism require a child to have 24-hour supervision. In some instances, parents and guardians have little choice but to place a child in an institutionalized setting to receive the care needed. Some state governments cover the costs involved with caring for children in these settings. The Internal Revenue Services categorizes the monies used to cover these costs as scholarship funds. This means tax filers can count this income source as an exemption when filing taxes.

Often, parents still pay for a child’s living needs, such as health care, clothing and toiletries. This money counts towards the financial support requirement when claiming a child as a dependent. Because the IRS labels room and board costs as scholarship money, these costs don’t count towards the financial support requirement. This enables parents to still meet the financial support requirement when claiming a child as a dependent.

Caring for children with autism sometimes requires a long-term financial commitment on the part of parents or guardians. To put aside money for future expenses, parents can open a special-needs trust account, which functions much like an investment account. This way parents can cover some or all of the costs involved with a child’s present and future care. A special-needs trust account also functions as a qualified disability trust. According to the Autism Support Network, qualified disability trust accounts allow for parents to claim a tax exemption of up to $3,500 a year on interest earnings from the account.