Tax Deductions and Credits for People with Disabilities and Their Families
If you or your spouse have a disability, or if you care for a dependent with a disability, you may be able to qualify for one...Read more
Social Security Disability Income (SSDI) and Supplemental Security Income (SSI) are the two primary federal disability benefits that provide monetary assistance for people with special needs. Both programs allow working beneficiaries to deduct certain work-related expenses from their countable income, making it easier to qualify for benefits or, in the case of SSI, to receive a larger payment.
In order to qualify for SSDI, a beneficiary must be "disabled," which under federal law means that the beneficiary has a physical or mental impairment that makes it impossible for him to engage in any "substantial gainful activity" (SGA), and this impairment must be expected to last for longer than one year or to result in death. The Social Security Administration (SSA) defines substantial gainful activity as being able to earn more than $1,090 a month from employment, so if a potential SSDI beneficiary works part time and earns $1,300 a month, he is not considered disabled and he won't receive SSDI. Fortunately, an SSDI recipient's assets and unearned income don't count against him, so a person who can't work but has $10 million in the bank that generates $10,000 a month in interest will still qualify for SSDI because that income does not come from working.
SSI treats income differently. The SSA reduces an SSI beneficiary's benefit by 50 cents for every dollar that beneficiary earns from working, and it reduces the benefit by one dollar for every dollar of unearned income received by an SSI beneficiary. If the SSI beneficiary's award drops to zero as a result of these reductions, she will lose her SSI benefits. This makes SSI a much more restrictive program than SSDI since unearned income harms the SSI recipient but not the SSDI beneficiary.
In either case, if an SSDI or SSI beneficiary has unreimbursed impairment-related work expenses that allow her to do her job, the SSA will allow the beneficiary to deduct those expenses from her countable earned income. For an SSDI beneficiary who may be slightly over the SGA limit, this reduction could allow her to qualify for benefits. For an SSI beneficiary, the reduction could mean access to SSI or increased benefits.
In order for an expense to qualify as an impairment-related work expense, it must be paid by the beneficiary, not by any other source, including insurance. The expense must be incurred for an item or service that allows the beneficiary to work, is required because of the beneficiary's impairment and is priced in line with comparable goods and services. It does not matter if the item or service is also used outside of work.
There are many examples of impairment-related work expenses. For instance, if a worker needs attendant services in order to get to work or to perform her job once there, those services qualify as impairment-related work expenses. Medical devices and non-cosmetic prosthetics often qualify as impairment-related work expenses, as do drugs that aren't paid for by insurance and control the disabling condition so the beneficiary can work. Specialized transportation services, but not public transportation, can also be deducted.
As is the case with any SSI or SSDI question, it's best to consult with your special needs planner to determine whether your expenses qualify as impairment-related work expenses.