It’s that time of year again. By now many of us have started to receive our “Important Tax Information Enclosed” letters that give us the needed data in order to file our taxes. If you are like me, the process of organizing financial materials and paying taxes is one of the most confusing tasks out there. However, with a little education and access to the information and resources available, a disabled taxpayer can make their job a lot simpler.
There are several tax credits and benefits available to qualifying taxpayers with disabilities as well as to the parents of disabled children. Listed below are several tax credits and other benefits available if you or someone else listed on your federal tax return is disabled.
The Earned Income Tax Credit - The EITC is available to disabled taxpayers as well as to the parents of a child with a disability. The EITC is a tax credit that not only reduces a taxpayer’s tax liability but may also result in a refund. Many working individuals with a disability, who have no qualifying children, but are older than 25 and younger than 65 do, in fact, qualify for EITC. Additionally, if the taxpayer’s child is disabled, the age limitation for the EITC is waived. The EITC has no effect on certain public benefits. Any refund you receive because of the EITC will not be considered income when determining whether you are eligible for benefit programs such as Supplemental Security Income and Medicaid.
The Credit for the Elderly or Disabled - This credit may be available to taxpayers who are age 65 or older, or who are younger than 65 and are retired on permanent and total disability.
Child or Dependent Care Credit - Taxpayers who pay someone to come to their home and care for their dependent or spouse may be entitled to claim this credit. There is no age limit if the taxpayer’s spouse or dependent is unable to care for themselves.
Impairment-Related Work Expenses - Employees who have a physical or mental disability limiting their employment, may be able to claim business expenses in connection with their workplace. The expenses must be necessary for the taxpayer to work.
Impact on the Standard Deduction - Taxpayers who are legally blind may be entitled to a higher standard deduction on their tax return.
Gross Income - Certain disability-related payments, Veterans Administration disability benefits, and Supplemental Security Income may be excluded from a taxpayer’s gross income.
For more information on tax credits and benefits available to disabled taxpayers, see Publication 3966, Living and Working with Disabilities, or Publication 907, Tax Highlights for Persons with Disabilities, available on IRS.gov or by calling 800-TAX-FORM (800-829-3676).
Wanting Face-to-Face Contact?
IRS Taxpayer Assistance Centers are your source for personal tax help when you believe your tax issue cannot be handled online or by phone. If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you're more comfortable talking with someone face-to-face, visit your local Taxpayer Assistance Center where you can spread out your records and talk with an IRS representative across the counter.
The VITA Program offers free tax help to low- to moderate-income (generally, $42,000 and below) people who cannot prepare their own tax returns. Certified volunteers sponsored by various organizations receive training to help prepare basic tax returns in communities across the country. VITA sites are generally located at community and neighborhood centers, libraries, schools, shopping malls, and other convenient locations. Most locations also offer free electronic filing. To locate the nearest VITA site, call 1-800-829-1040.
FREE Online Filing
Free File is the fast, easy, and free way to prepare and e-file your federal taxes online. The Free File program provides free federal income tax preparation and electronic filing for eligible taxpayers through a partnership between the Internal Revenue Service (IRS) and the Free File Alliance LLC, a group of private sector tax software companies. You qualify if your adjusted gross income was $56,000 or less in 2008. Free File covers the most commonly filed Federal tax forms and schedules, does all the math for you, and you get your refund in as little as 10 days with Direct Deposit. The program is also available in Spanish.
Taxes and Your Social Security Benefits
Some people who get Social Security have to pay taxes on their benefits. About one-third of current beneficiaries pay taxes on their benefits. You will be affected only if you have substantial income in addition to your Social Security benefits.
- If you file a federal tax return as an “individual” and your income is more than $25,000, you have to pay taxes.
- If you file a joint return, you may have to pay taxes if you and your spouse have a combined income that is more than $32,000.
- If you are married and file a separate return, you will probably pay taxes on your benefits.
For more information about taxation of benefits, see IRS Publication 915, Social Security and Equivalent Railroad Retirement Benefits or contact the Internal Revenue Service.