Disability Tax Breaks

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From QUEST Magazine Volume 13, Number 1, JANUARY/FEBRUARY 2006

Disability Tax Breaks by Medvescek

Many taxpayers don't claim all the income tax breaks they're due. The

rule of thumb is: Any dollars you spend compensating for the effects

of disability that your nondisabled neighbor didn't have to spend may

be deductible.

Publications by the Internal Revenue Service (see www.irs.gov)

indicate these possible deductions:

Medical Deductions

See IRS Publication 502.

House and yard work if you're " substantially limited in one or more

major life activities "

The difference between the cost of an adapted vehicle and the cost of

a similar nonadapted one

The cost difference between making accessibility improvements to your

home (i.e., adding a ramp or bedroom suite) and the increased value

of your home as a result of those improvements

The extra cost of electricity for running a ventilator or other

electronics necessary for your health

Costs of having a live-in attendant, such as increased rent, utility

or food bills

Special education costs, including tutors, if they're due to a

learning disability associated with a medical condition

Nonprescription supplements (like coenzyme Q10), if recommended by a

doctor specifically for your condition.

Impairment-Related Work Expenses

See IRS Publication 502.

Unreimbursed business expenses may be deducted, provided they're

necessary to keep you employed. These may include personal attendant

services to get you out of the house in the morning, and adaptive or

assistive equipment.

Earned Income Tax Credit (EITC)

See IRS Publication 596.

This credit for extremely low-income individuals also benefits

moderately low-income families with " qualifying " children. Disabled

children of any age, including adults, may qualify, so long as the

child lives with the parent(s). Even if you don't owe any taxes, the

EITC can mean money back in your pocket — $1,800 is the average

refund for families with children.

Child/Dependent Care Credit

See IRS Publication 503.

This credit isn't just for kids. It also benefits those who pay for

care of a disabled adult child or spouse while they work or look for

work. There's no upper income limit.

Other Tips

Work with a knowledgeable tax adviser in preparing your return.

Document, document, document! Be prepared to make your case.

Retroactive claims may be filed for up to three years. Local and

state tax laws often give income and property tax breaks to people

with disabilities. For more information, call the IRS Hotline at

(800) 829-1040, or see " Take It All Off " in the March-April 2004 and

January-February 2005 issues of Quest.