Persons with Disabilities and Caregivers May Be Eligible for Tax Breaks

Q: Are there any special tax benefits for disabled people or their caregivers?

Being a person with a mental or physical disability or the caregiver of a child or adult with a disability can be tiring and difficult. Applying for Social Security Disability Insurance (“SSDI”) or Supplemental Security Income (“SSI”) can be complicated and riddled with red tape, denials, and appeals.

In order to qualify for SSDI benefits, a person must meet the government’s definition of “disabled”, must have paid into the Social Security system and have acquired the minimum number of work credits prior to becoming disabled; and must be younger than 65 years of age.

“Disabled” is defined as “the inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death which has lasted or can be expected to last for a continuous period of not less than 12 months”.

Many people mistakenly think that they need to be bedridden in order to qualify for SSDI benefits. Others become discouraged by the burdensome paperwork and process of applying for (and appealing denials of) benefits. That’s why it’s important to have an experienced Social Security disability law attorney on your side.

In addition to helping with the application and appeals process, Social Security disability law attorneys have other tips and helpful information that can be beneficial to disabled individuals. For example, many disabled people go without health insurance, not knowing that Covered California may be an option for coverage. In addition, homeless and or extremely poor disabled people often do not have a phone. But a phone is necessary so Social Security administration representatives can reach you. You may be entitled to a free phone and minutes depending on your circumstances.

At this time of year, you may question what tax benefits are available to people with disabilities or their caregivers, who often have crippling out-of-pocket expenses. While not intended as legal or tax advice for the reader to rely on– but just for general informational purposes– some potential tax benefits which may apply to certain disabled persons or their caregivers include the following:

  • ABLE account – this may be an option under certain circumstances or if you have SSI and are blind or disabled before age 26. It’s a new form of savings account that grows tax free and can be spent on eligible expenses without taxes or penalties.
  • Higher standard deduction– this may be an option under certain circumstances if you or your spouse is blind.
  • Child and dependent care credit – this may be an option under certain circumstances if you use child or adult day care. There is a $3000 per dependent credit with a maximum $6000 for all dependents.
  • Credit for the Elderly or the Disabled – this may be an option under certain circumstances for those who are permanently disabled or over 65. The credit ranges from $3750-$7500 for those qualified, may require a doctor statement in some cases.
  • Disabled child dependent claim (any age) – this may be an option for some with disabled special needs older children or adults under certain circumstances, may be required to provide at least half of their support to qualify.
  • Medical and dental expenses deduction—this may apply under certain circumstances if the itemized costs of care exceed 7.5-10% of your adjusted gross income (depending on your age). The excess may be a deduction.
  • Adopted special needs child credit – $13,460 per child in the year the adoption is finalized.

Again, the above list is intended as informational points for disabled people to discuss with their accountant or tax professional and not as tax or legal advice to be relied upon in any particular case when preparing tax returns.

The attorneys at Peña & Bromberg have over 30 years of experience representing clients in SSDI matters. If you are in California and need help applying for or appealing the denial of SSDI benefits, call us at 559-412-5390 for a free consultation. We serve clients throughout Central Valley California, including San Francisco Bay, Oakland, Bakersfield, Madera, Stockton, Fresno, Sacramento, and Modesto.

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