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Tax Credits, Benefits and Deductions for Disabled Taxpayers

February 23rd, 2011 by Filed under: Filing Taxes, Tax Credits & Deductions, Tax Tips

disabled tax creditsIf you are a taxpayer and have a disability or have a child or other dependent with a disability you may qualify for numerous tax deductions and credits when you file your income tax return. Here is a look at the different benefits and what you need to know.

  • Increased Standard Deduction: If you are blind or partially blind you may be able to claim a higher standard deduction when you file your tax return. In order to get the additional deduction you may need to get a statement from a certified eye doctor or an optometrist stating that your vision is classified as legally blind.

  • Credits Available For The Disabled And The Elderly: A credit is available for some tax payers who are 65 years of age or older or for disabled individuals who are under the age of 65 that are retired due to a permanent or total disability.
  • Impairment Related Work Expenses: If you have limitations when it comes to your physical or mental capabilities that affects your employment ability you may be able to claim any business related expenses that are needed for you to be able to work. You must be able to prove that the expenses you are claiming are necessary in order for you to be employable.
  • The Earned Income Tax Credit: The Earned Income Tax Credit or EITC is available for those who file that have a disability and to those parents of children with disabilities. This credit reduces your tax liability. When you are retired because of a disability and receiving benefits from your previous employer you are taxed on that income. Under their disability retirement plan that money is classified as earned income until you reach the minimum retirement age. The EITC credit is important for the disabled because it reduces your taxable income and may even be enough to help you receive a refund. The EITC is also available to tax payers who have a child that is disabled. Additionally, it is important to note that any money you receive as a result of the EITC does not affect any of your other benefits and is not considered taxable income.
  • Medical Expenses: Many times medical expenses can be deducted as long as you file using a 1040 schedule A form. To find out if you are eligible you can check out the IRS publication 502 that is on dental and medical expenses.
  • Credit For Child Or Dependent Care Costs: If you are a taxpayer who has to pay for care for your disabled child, other dependent or spouse in order to be able to work or look for work, you very well may qualify for a credit. With this credit there is no age limit that must be met in order to qualify as long as you can show the person under your care can not be left alone.
  • Gross Income Exclusions: Some disability payments including Veteran Disabilities and supplemental security income may be excluded from your total gross income.

For more information and help in determining whether or not you qualify for any of the above tax benefits you can consult with a tax professional. Additionally, you may want to read the IRS publication 3966 which provides information on Living and Working With Disabilities.


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