Tax benefits for those with disabilities

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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:

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Tax benefits for those with disabilities

  1. 1. Tax Benefits for Those with DisabilitiesIf you suffer from a disability that keeps you from working, you also have a limitedincome. Fortunately, the federal government offers tax relief for people with disabilities.Taxpayers with disabilities, and parents of children with disabilities, may qualify for anumber 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 CreditThis is a tax credit that is available to certain taxpayers age 65 and older, as well as sometaxpayers with disabilities under age 65. If you had to retire early due to a permanent andtotal disability, you might qualify for the Elderly and Disabled tax credit. This reducesthe amount of income tax you owe on a dollar-for-dollar basis. To claim the credit, youmust complete and attach a Schedule R to your return.Standard DeductionLegally blind or partially blind taxpayers may be eligible to claim a higher standarddeduction when filing their tax returns. To receive the added deduction, you may need toprovide a statement from a certified eye doctor or optometrist explaining your visionimpairment.Medical ExpensesAlthough this deduction is available for all taxpayers, a disability may significantlyincrease your itemized deduction for medical expenses. The medical expenses deductionincludes a wide range of expenses related to maintaining your health and will includeyour hospital and doctor bills, as well as prescription medications. These expenses shouldbe totaled for the tax year using the 1040 Schedule A form. Deduct the amount thatexceeds 7.5 percent of your adjusted gross income.Gross Income ExclusionsSome disability-related payments such as Veterans Disability Benefits and SupplementalSecurity Income (SSI) may be excluded from your total gross income.Impairment-Related Work ExpensesEmployees with work-related limitations due to physical and mental disabilities may beable to claim business-related expenses required to maintain employment. To claim thesedeductions, you must be able to prove that the expenses are necessary for you to beemployable.
  2. 2. Earned Income Tax CreditThis credit reduces your tax liability and is available to disabled taxpayers, as well as tothe parents of a child with a disability. If you receive tax exempt disability payments andyour other taxable income is relatively low, the earned income credit may increase yourtax savings and may result in a refund. Even if you don’t owe taxes for the year, youshould still claim the credit because it allows you to claim a refund when it exceeds yourtax liability.Child or Dependent Care CreditTaxpayers who pay someone to care for their dependent, child or spouse so they canwork or look for work may qualify for this credit. There is no age limit to qualify if theperson under your care is unable to care for himself.Seek help with your tax return to optimize your financial situation. The IRS has created aprogram called Volunteer Income Tax Assistance (VITA) to help people with low tomoderate incomes file their tax returns. These trained volunteers can help prepare yourreturns and determine which tax benefits may maximize your refund.If this is the first year that you received Social Security disability benefits, you must paytax 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 cansave you money.

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