Taxes and disability deductions
The April 15 filing deadline for 2010 income tax returns is still several months off, but taxpayers hoping for a refund may want to get acquainted with Internal Revenue Service (IRS) and other tax-related resources now. The following publications describe some potential areas of deduction for individuals and families affected by disability.
These forms and publications can be obtained free from the IRS by calling (800) 829-3676.
Internal Revenue Service (IRS)
Topic 102 — Tax Assistance for Individuals with Disabilities and the Hearing Impaired
Publication 910 — Guide to Free Tax Services
Information in this publication complements that in Topic 102.
Publication 907 — Tax Highlights for Persons with Disabilities
Covers deductions for such things as wheelchair purchases, service animals and home accessibility modifications.
Publication 502 — Medical and Dental Expenses
Publication 503 — Child and Dependent Care Expenses
The cost of hiring a caregiver for a child or adult dependent with a disability may be deductible.
Publication 524 — Credit for the Elderly or the Disabled
Publication 525 — Taxable and Nontaxable Information
Describes some disability-related expenses that may be excluded from gross income.
Publication 529 — Miscellaneous Deductions
Includes unreimbursed work expenses related to disability, such as special technology or adaptations.
Publication 596 — Earned Income Tax Credit (EITC)
Applies to some who work and have low earned income. Note that the EITC has been temporarily increased for tax year 2010 for married couples filing jointly, and for taxpayers with three or more qualifying children.
Publication 3966 — Living and Working with Disabilities
Goes into more detail about some deductions described in the IRS publications above.
Seven Tax Tips for Disabled Taxpayers
Free tax preparation services
The IRS Tax Counseling for the Elderly (TCE) and Volunteer Income Tax Assistance (VITA) programs use trained community volunteers to provide free tax help for qualified taxpayers.
Offers free help to low- to moderate-income people (earning $49,000 and below) at VITA sites in many communities. Call for locations.
Free tax help to people 60 and older. As part of IRS’ TCE, AARP offers its Tax-Aide counseling program at more than 7,000 sites nationwide.
Tip for new SSDI recipients
Applying for and being approved by Uncle Sam to receive monthly Social Security Disability Insurance (SSDI) payments can sometimes take years. A person who does get the thumbs-up to receive SSDI may receive thousands of dollars in retroactive payments. But note: You don’t have to pay taxes on that lump sum all in one year. Tax payments can be spread out over several years. Consult your tax return preparer on the best way to do this.