Often-Overlooked Tax Credit Expanded, Now Covers More People with Disabilities
Built into the American Recovery Plan Act of 2021 are new rules and income thresholds that expand the pool of taxpayers who q...Read more
Millions of people each year earn cash refunds from the Internal Revenue Service (IRS) via the Earned Income Tax Credit (EITC). However, many others, including many people with disabilities, are not taking advantage of this generous program.
In late January 2018, the IRS issued a Notice encouraging tax filers with disabilities to apply for the EITC. The credit could put a refund of up to $7,430 into an eligible taxpayer’s pocket (for the 2023 tax year).
According to the IRS, many eligible people miss out on the EITC. This is because they fall below the income threshold requiring them to file taxes. Yet these individuals could still file taxes and possibly get the credit. Others incorrectly believe that receiving the EITC will jeopardize their ability to qualify for other government benefits.
The EITC is available to individuals making up to $17,640 (in 2023). This figure rises based on the person’s tax filing status and the number of qualifying children in their household. For a married couple filing jointly with three qualifying children, the maximum household income is $63,698 (in 2023). Married couples filing taxes separately, as opposed to jointly, are not eligible for the EITC.
Taxpayers may claim a child with a disability if the taxpayer meets all other EITC requirements. There are also special rules for taxpayers who have relatives of any age with a disability.
For many EITC recipients, the credit may result in paying less in taxes while also receiving a refund from the IRS. As mentioned above, the maximum refund for 2023 will be $7,430. Find out if you are eligible for the EITC using the IRS' online assistant tool.
To be eligible for the EITC, people must have “earned income.” Income from Social Security Disability Insurance (SSDI), Supplemental Security Income (SSI), or military disability benefits is not considered “earned income.” However, recipients of these programs could still benefit from the EITC if other people in their household are making “earned income.”
Note that income from employer-provided disability benefits is considered “earned income” until the recipient reaches “minimum retirement age” (the age at which the person could have begun receiving a pension or annuity from their former employer).
Refunds received via the EITC are not considered income for the purposes of means-tested government benefit programs. (Means-tested programs include Medicaid, SSI, Supplemental Nutritional Assistance Program (SNAP) benefits, and Section 8 housing.)
Eliminate questions and receive an IRS estimate of the size of your potential refund from the EITC.
For people needing assistance in filing their taxes, the IRS has a Volunteer Income Assistance Program. This program provides free services for certain people making less than $54,000, including people with disabilities and limited English speakers. For the elderly, the IRS has a similar program, known as the Tax Counseling for the Elderly program.