The IRS understands the need to make sure individuals with disabilities receive simple and easy access to tax help and education. There are many resources available to support taxpayers with disabilities, as they work toward fulfilling their tax obligations. As a tax professional, it’s important that you have some information regarding the topic to help clients and their family members.
I’ve outlined specific resources that will help people with disabilities during tax season. By being knowledgeable and having options, tax professionals show their genuine concern for clients. This will give you credibility and client loyalty.
1. Volunteer Income Tax Assistance and Tax Counseling for the Elderly
The first resource to look at is free tax preparation services through Volunteer Income Tax Assistance and Tax Counseling for the Elderly (VITA/TCE). VITA offers free tax return preparation to people who make $53,000 or less. IRS trained volunteers provide this free service.
Last year VITA/TCE sites prepared more than 3.6 million tax returns. This resulted in nearly $4 billion in refunds. Taxpayers who took advantage of this free service also saved money in return preparation fees. More than 500,000 of these returns were prepared for people with disabilities.
2. Earned Income Tax Credit (EITC)
Last year, more than 27 million taxpayers received more than $65 billion. The average amount of the EITC paid out in 2013 was $2,335 and lifted an estimated 6.5 million people out of poverty, including 3.3 million children. Estimates show 20 percent of Americans who qualify for the credit do not claim it. Research also shows there are approximately 1.5 million people with disabilities who did not file a tax return, but may be eligible for this credit. Many of the people who do not file are below the income threshold that requires them to file a tax return; however, the only way to receive this credit is to file a federal tax return. You must have earned income to receive this credit. Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI) are not considered earned income.
3. Child and Dependent Care Expenses
Child and Dependent Care Expenses are another tax credit often overlooked by people with disabilities. Many individuals and families use this credit when they have children under the age of 13 enrolled in a qualifying daycare or babysitter facility. However, if the person being cared for is physically or mentally unable to care for himself, which means the qualifying person cannot dress, clean or feed himself because of physical or mental disabilities, there is no age limitation as long as one spouse is working. Individuals who must have constant attention/care to prevent injury to themselves or others are also considered not able to care for themselves.
Individuals with disabilities are often concerned that a tax refund will impact their eligibility for one or more public benefits, including Social Security disability benefits, Medicaid and Food Stamps. The law is clear that tax refunds, including refunds from tax credits such as the EITC, shall not be taken into account as income for purposes of determining eligibility for benefits. Tax refunds and credits shall not count as resources for a period of 12 months from receipt of the refund. This applies to any federal program and/or any state or local program financed in whole or in part with federal funds.
4. Special Access:
The IRS also offers accessible federal tax forms and publications available for download from the IRS Accessibility page. Visit IRS.gov, select the “Forms & Pubs” tab and then the “Accessible” tab to access the accessible forms and publications. You can choose from large-print, text, accessible PDFs, e-Braille or HTML formats that are compatible with screen readers and refreshable Braille displays. The IRS also provides American Sign Language videos with the latest tax information. Publication 907, Tax Highlights for Persons with Disabilities, explains the tax implications of certain disability benefits and other issues.
5. 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. If you take a business deduction for these impairment-related work expenses, they are not subject to the 7.5 percent limit that applies to medical expenses. The expenses must be necessary for the taxpayer to work.
Don’t forget medical expenses: if you itemize your deductions, you may be able to deduct medical expenses. These deductions can usually include medical and dental expenses for yourself, your spouse and your dependents.
The chore of filing tax paperwork is already a huge responsibility. Take advantage of the help and resources provided to us to make the tax-filing load a little lighter