Tax benefits available to disabled taxpayers

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Grand Lux Tax Experts
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Tax Benefits Available To Disabled Taxpayers

• Disabled individuals, as well as parents of
  disabled children, may qualify for a number of
  tax credits and other tax benefits. Listed below
  are several tax credits and other benefits that
  are available if you or someone listed on your
  federal tax return is disabled.
• Increased Standard Deduction Since a change in
  the law more than 35 years ago, taxpayers (or
  spouses when filing a joint return) who are
  legally blind have been eligible for a standard
  deduction add-on. Thus, for 2021, if a taxpayer
  is filing jointly with a blind spouse, they are
  able to add an additional 1,350 to their
  standard deduction of 25,100 if both spouses
  are blind, the add-on doubles to 2,700.
• For other filing statuses, the additional amount
  is 1,700. While being age 65 or older isnt a
  disability, it should be noted that there is an
  elderly add-on to the standard deduction of
  1,350 or 1,700, depending on filing status.
  These add-ons apply only to the taxpayer and
  spouse, not to dependents.
• Exclusions from Gross Income Certain
  disability-related payments, Veterans
  Administration disability benefits, and
  Supplemental Security Income are excluded from
  gross income (i.e., they are not taxable).
  Amounts received for Social Security disability
  are treated the same as regular Social Security
  benefits, which means that up to 85 of the
  benefits could be taxable, depending on the
  amount of the recipients (and spouses, if
  filing jointly) other income.

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• Impairment-Related Work Expenses Individuals
  with a physical or mental disability may deduct
  impairment-related expenses paid to allow them to
  work.
• Employees Although the 2017 tax reform
  eliminated most miscellaneous itemized
  deductions, it retained the deduction for
  employees who have a physical or mental
  disability limiting their employment. As a
  result, they can still deduct the expenses
  necessary for them to work as an itemized
  deduction.
• Self-employed For those who are self-employed,
  impairment-related expenses are deductible on
  Schedule C or F.
• Impairment-related work expenses are ordinary,
  necessary business expenses for attendant care
  services at the individuals place of work as
  well as other expenses in the workplace that are
  necessary for the individual to be able to work.
  An example is when a blind taxpayer pays someone
  to read work-related documents to the taxpayer.

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• Financially Disabled Under normal
  circumstances, one must file a claim for a tax
  refund within 3 years of the unextended due date
  of the tax return. For example, for a 2018 tax
  return, the due date was April 15, 2019, which is
  when the 3-year clock started running. Thus, the
  IRS will not issue refunds for an amended 2018 or
  a late-filed original 2018 return submitted to
  the IRS after April 15, 2022. However, if a
  taxpayer is financially disabled, the time
  period for claiming a refund is suspended for the
  period during which the individual is financially
  disabled.
• What does being financially disabled mean? An
  individual is financially disabled if they are
  unable to manage their financial affairs because
  of a medically determinable physical or mental
  impairment that can be expected to result in
  death or that has lasted or can be expected to
  last for a continuous period of not less than 12
  months.
• For a joint income tax return, only one spouse
  has to be financially disabled for the time
  period to be suspended. However, financial
  disability does not apply during any period when
  the individuals spouse or any other person is
  authorized to act on the individuals behalf in
  financial matters.
• Earned Income Tax Credit (EITC) The EITC is
  available to disabled taxpayers and the parents
  of a child with a disability, even when the
  childs age would normally prevent the child from
  being a qualifying child. To be eligible for the
  credit, the taxpayer must receive earned income,
  which generally means wages or self-employment
  income.

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• However, if an individual has retired on
  disability, taxable benefits received under their
  employers disability retirement plan are
  considered earned income until the individual
  reaches a minimum retirement age. If the
  disability benefits received are nontaxable, as
  would be the case if the disabled individual paid
  the premiums for the disability insurance policy
  from which the benefits come, then the benefits
  are not considered earned income.
• The EITC is a tax credit that not only reduces a
  taxpayers tax liability but may also result in a
  refund. Many working individuals with a
  disability who have no qualifying children may
  qualify for the EITC.
• If a taxpayers child is disabled, the qualifying
  childs age limitation for the EITC is waived.
• The EITC has no effect on certain public
  benefits. Any refund received because of the EITC
  will not be considered income when determining
  whether a taxpayer is eligible for benefit
  programs such as Supplemental Security Income and
  Medicaid.
• Child or Dependent Care Credit Taxpayers who
  pay someone to come to their home and care for
  their dependent or disabled spouse may be
  entitled to claim this credit. For children, this
  credit is usually limited to the care expenses
  paid only until age 13, but there is no age limit
  if the child is unable to care for themselves.
• Special Medical Deductions When Claiming Itemized
  Deductions In addition to conventional medical
  deductions, the tax code provides special medical
  deductions related to disabled taxpayers and
  dependents.

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