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 or more tax credits and deductions.  Here is a description of some of the more common ones:

Medical Expenses

If you, a spouse or a dependent incur medical or dental expenses over the course of a year, you may be able to deduct them.  In general, if you are under age 65, you can deduct your medical or dental expenses that exceed 10 percent of your adjusted gross income.  People who are 65 and over can deduct expenses that exceed 7.5 percent of adjusted gross income.  For example, if your adjusted gross income is $50,000 and you have $10,000 of medical expenses, you can deduct $5,000.  (10 percent of $50,000 is $5,000, subtracted from $10,000 of total medical expenses to arrive at a $5,000 deduction).

There are many types of services that qualify as medical expenses, including Braille books, telephone equipment for the hearing impaired, guide dogs, some long-term care insurance premiums and hearing aids, just to name a few.

Impairment-Related Work Expenses

If you have impairment-related work expenses due to the purchase of goods or services that allow you to do your job, you can include these expenses as a business deduction on your tax return instead of deducting them as regular medical expenses.  In this case, you don't have to wait until your expenses exceed 10 percent of your adjusted gross income; you can deduct all qualifying impairment-related work expenses from dollar one.

Child and Dependent Care Tax Credit

You may be entitled to a tax credit for up to 35 percent of your expenses if, in order for you to work or look for work, you pay for care for a dependent child under the age of 13, a spouse who can't take care of himself or any other person who lived with you for at least half a year, could not care of himself and either was your dependent or could have been your dependent except for several unusual factors.  

Elderly or Disabled Tax Credit

If you are 65 or older, or if you have retired on permanent or total disability, you are entitled to a small tax credit.

Earned Income Tax Credit

If your adjusted gross income from working is low, you can qualify for this tax credit.  In order to qualify in 2015, you must make less than $14,820 if you are single with no children, $20,330 if you are married and filing jointly with no children, and between $39,131 and $53,267 depending on your marital status and number of children.  In order to qualify, your children must either be under the age of 19, a full-time student under the age of 24 or permanently and totally disabled.

In some cases, a person with disabilities or her family could qualify for all of these credits and deductions.  If you file an income tax return, or if you think you might need to in the future, talk to your special needs planner about how these credits and deductions may apply to you.