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Don't overlook disability tax breaks

by Christina Medvescek on January 1, 2006 - 3:14pm

QUEST Vol. 13, No. 1

Many taxpayers don’t claim all the income tax breaks they’re due. The rule of thumb is: Any dollars you spend compensating for the effects of disability that your nondisabled neighbor didn’t have to spend may be deductible.

Publications by the Internal Revenue Service (see indicate these possible deductions:

Medical deductions

See IRS publication 502.

  • House and yard work if you’re “substantially limited in one or more major life activities”
  • The difference between the cost of an adapted vehicle and the cost of a similar nonadapted one
  • The cost difference between making accessibility improvements to your home (i.e., adding a ramp or bedroom suite) and the increased value of your home as a result of those improvements
  • The extra cost of electricity for running a ventilator or other electronics necessary for your health
  • Costs of having a live-in attendant, such as increased rent, utility or food bills
  • Special education costs, including tutors, if they’re due to a learning disability associated with a medical condition
  • Nonprescription supplements (like coenzyme Q10), if recommended by a doctor specifically for your condition.

Impairment-related work expenses

See IRS Publication 502.

Unreimbursed business expenses may be deducted, provided they’re necessary to keep you employed.

Earned income tax credit (EITC)

See IRS Publication 596.

This credit for extremely low-income individuals also benefits moderately low-income families with “qualifying” children. Disabled children of any age, including adults, may qualify, so long as the child lives with the parent(s). Even if you don’t owe any taxes, the EITC can mean money back in your pocket — $1,800 is the average refund for families with children.

Child/Dependent care credit

See IRS Publication 503.

This credit isn’t just for kids. It also benefits those who pay for care of a disabled adult child or spouse while they work or look for work. There’s no upper income limit.

Other tips

  • Work with a knowledgeable tax adviser in preparing your return.
  • Document, document, document! Be prepared to make your case.
  • Retroactive claims may be filed for up to three years.
  • Local and state tax laws often give income and property tax breaks to people with disabilities.
  • For more information, call the IRS Hotline at (800) 829-1040.

Editor's note: Parts of this article have been deleted due to updated IRS guidelines for disability tax deductions. (10-2008)

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