Tax Benefits for Disabled Taxpayers
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).
Links:
Publication 3966, Living and Working with Disabilities
Publication 907, Tax Highlights for Persons with Disabilities
Info Regarding Qualified Tuition Plans "529 plans"
States may establish and maintain programs that allow you to either prepay or contribute to an account for paying a student’s qualified education expenses at a postsecondary institution (defined below). Eligible educational institutions may establish and maintain programs that allow you to prepay a student’s qualified education expenses. If you prepay tuition, the student (designated beneficiary) will be entitled to a waiver or a payment of qualified education expenses. You cannot deduct either payments or contributions to a QTP. For information on a specific QTP, you will need to contact the state agency or eligible educational institution that established and maintains it.
Even if a QTP is used to finance a student’s education, the student or the student’s parents still may be eligible to claim either the Hope credit or the lifetime learning credit.
What Is a Qualified Tuition Program
A qualified tuition program is a program set up to allow you to either prepay, or contribute to an account established for paying, a student’s qualified education expenses at an eligible educational institution. QTPs can be established and maintained by states (or agencies or instrumentalities of a state) and eligible educational institutions. The program must meet certain requirements. Your state government or the eligible educational institution in which you are interested can tell you whether or not they participate in a QTP.
See IRS web site for more information http://www.irs.gov/publications/p970/ch08.html
Notice 2009-01 modifies Notice 2001-55, 2001-2 CB 299, and provides that a section 529 program (qualified tuition program) does not violate the investment restriction under section 529(b)(4) if it permits a participant to change investment strategy selected for a section 529 account twice during calendar year 2009. A change in investment strategy upon a change in the designated beneficiary of the account continues to be permitted as under Notice 2001-55. Notice 2009-01 will appear in IRB 2009-2, dated Jan. 12, 2009.
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