Disabled taxpayers often incur more medical expenses than other taxpayers do, and they are often unable to earn as much income to cover them. Fortunately, the Internal Revenue Service offers certain tax credits that taxpayers can use to reduce the income tax they owe at the end of the year.
Credit for the Elderly or Disabled
To claim the credit for the elderly or disabled, either you must be over age 65, or you must be totally disabled. If you are disabled, you must also earn taxable disability income during the year. However, you cannot claim the credit unless your adjusted gross income and total taxable disability income fall within certain limits published by the IRS. Depending on your income and filing status, you may qualify for a credit of up to $7,500.
Earned Income Tax Credit
Disabled taxpayers can sometimes use their disability income to qualify for the earned income tax credit. If you are disabled and haven't yet reached your minimum retirement age, you can count disability retirement benefits received from pensions or annuities as earned income. However, you cannot use military disability pensions, Supplemental Security income or Social Security disability income to qualify for this credit, nor can you use any benefits you receive from a disability insurance policy.
Child and Dependent Care Credit
If your spouse pays for someone to care for you so he can work, you may qualify for the child and dependent care credit. To qualify for this credit, you must be physically or mentally incapable of caring for yourself, and you and your spouse must file jointly. If you qualify, you can claim a tax credit of up to 35 percent of the first $3,000 you pay toward care expenses, depending on your adjusted gross income.
In addition to tax credits, disabled taxpayers can also take advantage of deductions that reduce their taxable income. For example, if you pay for medical or dental care during the year, you can typically deduct those expenses you pay in excess of 7.5 percent of your adjusted gross income. If you are legally blind and you don't itemize, you may also be able to claim an increased standard deduction. Furthermore, you can exclude many types of disability payments from your taxable income, including SSI and VA disability benefits.
Amanda McMullen is a freelancer who has been writing professionally since 2010. She holds a bachelor's degree in mathematics and statistics and a second bachelor's degree in integrated mathematics education.