The IRS grants individuals with disabilities a variety of tax programs including free preparation as well as credits and deductions. Recognizing that those who live with a disability have to fight for their earning potential while also coping with higher than average medical bills, these programs reduce your tax liability. They may even go as far as providing you a refund.
If you qualify as disabled under IRS rules, you can benefit. Here's what the IRS offers to taxpayers with a disability.
Preparing Your Taxes: Programs For Taxpayers With Disabilities
Can't afford a fancy accountant? The IRS has you covered. It runs programs in conjunction with local businesses to ensure you don't need to stress about filing your taxes on time. The IRS even trains the program participants it recruits, so you can be confident that the person you work with has met a specific standard of training.
Here are the programs available to taxpayers with disabilities, retired taxpayers (including disabled people), and veterans (including disabled veterans).
Taxpayers With Disabilities
If you have a disability, you qualify for the Volunteer Income Tax Assistance (VITA) program that provides free tax preparation help. VITA offers IRS-certified volunteers free basic tax return services through electronic filing. You won't pay a thing, and the certified volunteers regularly work with those who have disabilities or earn low-incomes.
That means you can be confident that they know all of the disability tax deductions available to you.
Retirement-Age Taxpayers (With or Without Disabilities)
Are you 60 years of age or older and disabled? Get in touch with Tax Counseling for the Elderly (TCE). The program helps older taxpayers navigate their tax liability, pensions, and other retirement-related issues. TCE is also available to those who are retirement-age but not disabled. Where can you find VITA and TCE volunteers?
They work across the country in convenient locations like libraries, community centers, schools, and other community areas. You can call 800-906-9887 to find volunteers nearest to you. If you want to use the TCE program, then you'll ask the AARP, whose Tax-Aide program operates most of the sites.
Veterans And Disabled Veterans
Are you a veteran with a disability? The IRS partners with the VA to ensure all veterans access relevant tax information. Veterans with disabilities can also use the VITA program. If you are a veteran who is not disabled, you still qualify for free tax prep. The IRS and VA entered into a Memorandum of Understanding (MOU) that requests that partnering organizations offer free returns to veterans and their families.
Disability Tax Deductions: What You Need To Know
The IRS offers specific disability tax credits or deductions when you are:
- Legally blind
- Physically or mentally disabled (with limited employment opportunities)
- Elderly or disabled (or both)
- Physically or mentally disabled (with gross income)
Those programs targeted at you according to where you fall within those categories. Generally, there are two credits and three deductions you should know about:
Credit For The Elderly Or The Disabled
If you are over 65 or permanently retired due to total disability, you may qualify for the Credit for the Elderly or the Disabled. The credit mainly targets those with minimal incomes, such as those living on pensions and social security. As a result, you likely won't qualify unless you are retired. To qualify as someone under 65 with a disability, you will need to have retired before your employer's official retirement age as a result of your disability.
You will also need proof of your disability from your doctor. However, you do not need to submit the letter as evidence.
Higher Standard Deduction For Blind Taxpayers
If you are legally blind, then you benefit from a higher standard deduction. Those who are legally blind may increase their standard deduction by $1,600 when they file as Head-of-Household or Single. For those who file as Married Filing Jointly and one of the spouses is blind, you can choose to increase your standard deduction by $1,300.
The increased deduction also applies to taxpayers over 65.
Medical Expenses Deductions
If you choose to itemize your deductions, you can deduct your medical expenses, including insurance premiums. To qualify for 2019 and later, your expenses must be more than 10 percent of your adjusted gross income. Everyone can use this deduction if they forgo the standard deduction for itemization whether or not they have a disability.
Disability Payments As Non-Taxable Income
Living on disability income isn't easy, so the IRS doesn't always count it as taxable income. That means you get to keep more of your money every year without first paying it to the government. You need to declare non-taxable income on your tax forms, but it won't count towards the amount the IRS will tax. Some of the income the IRS chooses not to tax includes:
- Some military service-connected disability payments
- Benefits from public welfare funds
- Workers' compensation
- Damages paid for physical injuries, illness, or loss of use of your body/functions, or disfigurement
- Disability benefits through auto insurance policies
If you receive Social Security benefits for your disability, most of the benefit goes untaxed. However, you still have to pay on some income.
Earned Income Tax Credit
The Earned Income Tax Credit (EITC) is a credit available to those who earn low incomes, such as part-time workers. You don't have to owe taxes to qualify: you only need to file. If you don't owe a balance, you could get a refund as a result. The IRS adjusts the income limits every year. In 2019, the upper limit for someone single with no dependents reached $15,570.
Those married and filing jointly with no children can earn $21,370. The limits increase for each child up to three. You cannot claim the credit if someone else claims you as a dependant.
Individuals With Disabilities Have Tax Options
The IRS makes special provisions for individuals with disabilities, whether they work or not. It tries to ensure that federal taxes don't unfairly burden those who find their disability impacts their earning potential. Are you disabled? Make sure you take advantage of all of the qualifying tax deductions and credits as well as the free programs for filing. Just bring your form W-2 or pay stubs to get started.
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