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Tax benefits for disabled individuals

You may qualify for different tax deductions, income exclusions or credits if you have a disability or have a child with a disability. There are a variety of tax credits and tax benefits for disabled individuals available for those living and working with disabilities.

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As a disabled individual, what tax benefits are available to you?

If you are legally blind, you may receive a higher standard deduction.

Certain payments received related to your disability are excluded from your gross income. This includes allowances paid by the Department of Veteran Affairs (VA) and Supplemental Security Income (SSI).

If you are 65 or older or are retired on permanent disability under 65 and received taxable disability income, you may be eligible to receive the credit for the elderly or disabled. The credit ranges from $3,750 to $7,500.

If you are functionally limited by your disability at work, you may be able to claim your business expenses that are incurred for you to be able to work.

You are allowed to deduct a variety of medical and dental expenses on Schedule A of your tax return. The medical expenses are highlighted in Publication 502. Some expenses include:

  • Costs of diagnosis
  • Treatment
  • Cost of equipment

You may qualify for the Earned Income Tax Credit (EITC), which is for people who work and have low to moderate earned income. Many working individuals with a disability who have no qualifying children, who are at least 25 years of age but under 65 years of age, qualify for EITC.

Finally, you can receive a credit for making contributions to an ABLE account. This is a tax-advantaged savings account for individuals with disabilities. The ABLE account beneficiaries may be able to claim the saver’s credit for a portion of their contributions. The 2021 contribution limit is $15,000. The credit is claimed on Form 8880 and is a non-refundable credit for individuals who meet the following criteria:

  • At least 18
  • Are not a dependent or a student
  • Meet income requirements

For more information on visit ABLE accounts at the IRS website.

If you have any questions, contact a Henry+Horne professional for more information.

Hannah Boyd

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