Tax Benefits for Those With Disabilities
If you suffer from a disability that keeps you from working, you also have a limited income.
Fortunately, the federal government offers tax relief for people with disabilities.
Taxpayers with disabilities, and parents of children with disabilities, may qualify for a number of IRS tax credits and benefits.
If you or someone on your tax return is disabled, you may qualify for some of the following tax benefits: Elderly and Disabled Tax Credit This is a tax credit that is available to certain taxpayers age 65 and older, as well as some taxpayers with disabilities under age 65.
If you had to retire early due to a permanent and total disability, you might qualify for the Elderly and Disabled tax credit.
This reduces the amount of income tax you owe on a dollar-for-dollar basis.
To claim the credit, you must complete and attach a Schedule R to your return.
Standard Deduction Legally blind or partially blind taxpayers may be eligible to claim a higher standard deduction when filing their tax returns.
To receive the added deduction, you may need to provide a statement from a certified eye doctor or optometrist explaining your vision impairment.
Medical Expenses Although this deduction is available for all taxpayers, a disability may significantly increase your itemized deduction for medical expenses.
The medical expenses deduction includes a wide range of expenses related to maintaining your health and will include your hospital and doctor bills, as well as prescription medications.
These expenses should be totaled for the tax year using the 1040 Schedule A form.
Deduct the amount that exceeds 7.
5 percent of your adjusted gross income.
Gross Income Exclusions Some disability-related payments such as Veterans Disability Benefits and Supplemental Security Income (SSI) may be excluded from your total gross income.
Impairment-Related Work Expenses Employees with work-related limitations due to physical and mental disabilities may be able to claim business-related expenses required to maintain employment.
To claim these deductions, you must be able to prove that the expenses are necessary for you to be employable.
Earned Income Tax Credit This credit reduces your tax liability and is available to disabled taxpayers, as well as to the parents of a child with a disability.
If you receive tax exempt disability payments and your other taxable income is relatively low, the earned income credit may increase your tax savings and may result in a refund.
Even if you don't owe taxes for the year, you should still claim the credit because it allows you to claim a refund when it exceeds your tax liability.
Child or Dependent Care Credit Taxpayers who pay someone to care for their dependent, child or spouse so they can work or look for work may qualify for this credit.
There is no age limit to qualify if the person under your care is unable to care for himself.
Seek help with your tax return to optimize your financial situation.
The IRS has created a program called Volunteer Income Tax Assistance (VITA) to help people with low to moderate incomes file their tax returns.
These trained volunteers can help prepare your returns and determine which tax benefits may maximize your refund.
If this is the first year that you received Social Security disability benefits, you must pay tax on the lump-sum retroactive award.
You do not want to pay more tax than necessary, so hiring a professional experienced in preparing taxes for people with disabilities can save you money.
Fortunately, the federal government offers tax relief for people with disabilities.
Taxpayers with disabilities, and parents of children with disabilities, may qualify for a number of IRS tax credits and benefits.
If you or someone on your tax return is disabled, you may qualify for some of the following tax benefits: Elderly and Disabled Tax Credit This is a tax credit that is available to certain taxpayers age 65 and older, as well as some taxpayers with disabilities under age 65.
If you had to retire early due to a permanent and total disability, you might qualify for the Elderly and Disabled tax credit.
This reduces the amount of income tax you owe on a dollar-for-dollar basis.
To claim the credit, you must complete and attach a Schedule R to your return.
Standard Deduction Legally blind or partially blind taxpayers may be eligible to claim a higher standard deduction when filing their tax returns.
To receive the added deduction, you may need to provide a statement from a certified eye doctor or optometrist explaining your vision impairment.
Medical Expenses Although this deduction is available for all taxpayers, a disability may significantly increase your itemized deduction for medical expenses.
The medical expenses deduction includes a wide range of expenses related to maintaining your health and will include your hospital and doctor bills, as well as prescription medications.
These expenses should be totaled for the tax year using the 1040 Schedule A form.
Deduct the amount that exceeds 7.
5 percent of your adjusted gross income.
Gross Income Exclusions Some disability-related payments such as Veterans Disability Benefits and Supplemental Security Income (SSI) may be excluded from your total gross income.
Impairment-Related Work Expenses Employees with work-related limitations due to physical and mental disabilities may be able to claim business-related expenses required to maintain employment.
To claim these deductions, you must be able to prove that the expenses are necessary for you to be employable.
Earned Income Tax Credit This credit reduces your tax liability and is available to disabled taxpayers, as well as to the parents of a child with a disability.
If you receive tax exempt disability payments and your other taxable income is relatively low, the earned income credit may increase your tax savings and may result in a refund.
Even if you don't owe taxes for the year, you should still claim the credit because it allows you to claim a refund when it exceeds your tax liability.
Child or Dependent Care Credit Taxpayers who pay someone to care for their dependent, child or spouse so they can work or look for work may qualify for this credit.
There is no age limit to qualify if the person under your care is unable to care for himself.
Seek help with your tax return to optimize your financial situation.
The IRS has created a program called Volunteer Income Tax Assistance (VITA) to help people with low to moderate incomes file their tax returns.
These trained volunteers can help prepare your returns and determine which tax benefits may maximize your refund.
If this is the first year that you received Social Security disability benefits, you must pay tax on the lump-sum retroactive award.
You do not want to pay more tax than necessary, so hiring a professional experienced in preparing taxes for people with disabilities can save you money.
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