Disability Tax Deductions 2016

Every year we like to help our readers with their taxes and hopefully save them a few bucks by sharing the latest disability tax deduction information for those living in the United States. Since we’re getting close to the due date for your 2016 taxes (due April 18, 2016 — we have 4 more days than usual thanks to an overlap of Federal holidays), we wanted to share the latest disability tax deduction information before you file your taxes.

If you haven’t filed yet, please check out the disability tax credits below for 2016. And remember, if you have a spinal cord injury you’re approved for most of the disability tax deductions you’ll see below.

– Earned Income Tax Credit (EITC):  If you made less than $14,880 in 2015, you’re eligible for this tax credit. Many people with SCI use this credit if they’re only working part-time. If you are single with no kids, this credit is $507 for 2016. Even if you didn’t make enough money last year to file, you should still file since you could still be eligible for this tax credit. And if you have kids, this credit increases up to $6269.

– Credit for the Elderly or Disabled: If you are under 65 and on permanent total disability, which applies to many people with SCI, or if you are retired, you can apply for this tax credit. You must however receive taxable disability income during the year to receive this credit, and meet the income limit requirements. To see if you’re, eligible go here

– Child or Dependent Care Credit: And lastly, if your spouse helped pay for your care last year, they are eligible for this tax credit. The maximum credit you can claim for this expense for 2015 is $3,000.

– Medical Costs Deduction: If your medical costs exceeded 7.5% of your adjusted gross income in 2015, you can deduct medical costs if they’re itemized. Deductible expenses include everything from medical and dental costs to travel expenses for treatments and medical insurance premiums. Even the gas it takes to drive to the pharmacy can be included.

Home modifications can also be included in this deduction category if they were done to make your home more accessible. This can include a wheelchair ramp, chair lift or grab bars, modifying hardware, electrical fixtures or railings or the widening of doorways or aisles.

Personal Use Items. You can’t include in medical expenses the cost of an item ordinarily used for personal, living, or family purposes unless it is used primarily to prevent or alleviate a physical or mental disability or illness. For example, the cost of a toothbrush and toothpaste is a nondeductible personal expense.

In order to accommodate an individual with a physical disability, you may have to purchase an item ordinarily used as a personal, living, or family item in a special form. You can include the excess of the cost of the item in a special form over the cost of the item in normal form as a medical expense.

– Lawyer Expenses Deduction: If you hired a legal professional last year to fight on your behalf to help you get the SSDI benefits, you can deduct the finder’s fee from your tax return.

– Impairment-Related Work Expenses Deduction: If you are a person with a disability, you can take a business deduction for expenses that are necessary for you to be able to work. If you take a business deduction for these impairment-related work expenses, they aren’t subject to the 10% limit that applies to medical expenses.

You have a disability if you have:

• A physical or mental disability (for example, blindness or deafness) that functionally limits your being employed, or
• A physical or mental impairment (for example, a sight or hearing impairment) that substantially limits one or more of your major life activities, such as performing manual tasks, walking, speaking, breathing, learning, or working.

Impairment-related expenses defined. Impairment-related expenses are those ordinary and necessary business expenses that are:

– Necessary for you to do your work satisfactorily,

– For goods and services not required or used, other than incidentally, in your personal activities, and

– Not specifically covered under other income tax laws.

Examples meeting the 3 bullets listed above could be:

– Attendant care to get you ready for work

– Attendant care at work

– Handicap related vehicle modifications/repairs

– Technology needed to do your job (tablet, headset, microphone, phone, etc)

– Furniture needed for you to do your job (an accessible desk or chair)

– Service dog expenses

Whatever you do – don’t let the fear of filing overwhelm you. With helpful online sites like Turbotax, H&R Block and free filing locations all around the country (go here to find a location near you), you should be able to file seamlessly and ensure you get every single disability tax-related deduction you can.

Is there anything we missed? Please add your disability tax tips in the comments below

Additional Information

– Living and Working with Disabilities (great tips for businesses seeking to accommodate the disabled and parents of kids with SCI https://www.irs.gov/pub/irs-pdf/p3966.pdf

– Tax Highlights for Persons with Disabilities, https://www.irs.gov/pub/irs-pdf/p907.pdf

– Credit for the Elderly or the Disabled, https://www.irs.gov/pub/irs-pdf/p524.pdf

– Watch this great video from TurboTax for an overview of many of the deductions we discussed above: https://turbotax.intuit.com/tax-tools/tax-tips/Tax-Deductions-and-Credits/Video–How-to-Get-IRS-Tax-Relief-for-the-Disabled/INF14694.html

Sources

– Disability and Earned Income Tax Credit, IRS, https://www.irs.gov/Credits-&-Deductions/Individuals/Earned-Income-Tax-Credit

– Guide to Schedule R: Tax Credit for Elderly or Disabled, https://turbotax.intuit.com/tax-tools/tax-tips/Retirement/Guide-to-Schedule-R–Tax-Credit-for-Elderly-or-Disabled/INF19377.html

– Child and Dependent Care Credit at a Glance, IRS, https://www.irs.gov/Credits-&-Deductions/Individuals/Child-and-Dependent-Care-Credit

– Claiming a Tax Deduction for Medical and Dental Expenses, IRS, https://www.irs.gov/uac/Claiming-a-Tax-Deduction-for-Medical-and-Dental-Expenses

– “Are Disability Lawyer Fees Tax Deductible?”, Geeks of Finance, http://www.geeksonfinance.com/info_8031598_disability-lawyer-fees-tax-deductible.html

– Tax Deductions for Impairment-Related Work Expenses http://finance.zacks.com/tax-deductions-impairmentrelated-work-expenses-9274.html

– Tax Tips for the Legally Disabled, Turbotax, https://turbotax.intuit.com/tax-tools/tax-tips/General-Tax-Tips/Tax-Tips-for-the-Legally-Disabled/INF22825.html