Are you missing out on valuable tax savings? Every year, thousands of Americans with disabilities leave money on the table by overlooking disability tax benefits they qualify for. Whether you’re newly filing with a disability or have been doing so for years, the tax code includes special deductions and credits designed for you. This guide will help you understand these tax advantages and keep more of your hard-earned money where it belongs—in your pocket.
Medical Expense Deduction for Disability Tax Benefits
If you itemize deductions on your tax return, you can deduct medical expenses that exceed 7.5% of your adjusted gross income (AGI). Many disability-related expenses qualify, including:
- Costs for diagnosis, treatment, and prevention
- Prescription medications
- Medical equipment and devices (wheelchairs, crutches, hearing aids)
- Home modifications for medical purposes (ramps, wider doorways, support bars)
- Transportation to medical appointments
- Long-term care services
- Service animal expenses
Example: If your AGI is $40,000, you can deduct medical expenses that exceed $3,000 (7.5% of $40,000). If you spent $8,000 on qualifying medical expenses, you could deduct $5,000.
Disability Tax Credit
The Credit for the Elderly or Disabled provides a tax credit for people who are:
- 65 or older, OR
- Under 65, retired due to a permanent disability, and receiving disability income
This credit ranges from $3,750 to $7,500, depending on your filing status and income level.
Earned Income Tax Credit (EITC) and Disability Tax Benefits
The Earned Income Tax Credit or EITC is designed for low to moderate-income workers. If you have a disability, you may qualify for this valuable tax credit as long as you have some earned income from working. While disability benefits (like SSDI) don’t count as earned income for this credit, they also don’t count against you in the income limits. People with disabilities who work part-time or have limited work hours may still qualify for the EITC even with modest earnings.
Child and Dependent Care Credit
If you pay someone to care for your dependent while you work or look for work, you may qualify for this credit. This includes care for a spouse or dependent of any age who can’t care for themselves due to physical or mental limitations.
Business Expenses for Work Accommodations
If you’re self-employed and have a disability, the cost of special equipment or services needed to work may be deductible as a business expense. This could include:
- Screen readers or other adaptive technology
- Sign language interpreters for business meetings
- Special office furniture needed for your disability
ABLE Accounts for Disability Tax Benefits
ABLE (Achieving a Better Life Experience) accounts allow people with disabilities to save money without affecting eligibility for programs like Medicaid or SSI. While contributions aren’t tax-deductible on federal returns, some states offer deductions for contributions to these accounts.
Tips for Filing Taxes with a Disability
- Gather documentation: Keep receipts for all medical expenses and disability-related costs.
- Consider free tax help: The IRS Volunteer Income Tax Assistance (VITA) program offers free tax preparation to people with disabilities.
- Look into accessible filing options: The IRS website has accessible forms and publications. Many tax software programs are also compatible with screen readers.
- Explore state disability tax benefits: Many states offer additional credits or deductions for people with disabilities.
- Check if you qualify for an extension: If your disability makes it difficult to file on time, you may qualify for an extension without penalties.
Remember, tax laws change regularly. Consider consulting with a tax professional who specializes in disability tax issues to ensure you’re getting all the benefits you’re entitled to.
By understanding these disability tax benefits, you can potentially reduce your tax burden and keep more money in your pocket to cover disability-related expenses.
How Tucker Disability Law Can Help
If you’re facing challenges with your benefits, Tucker Disability Law can help. Our expert team specializes in protecting clients like you and ensuring you get the support you deserve.
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