5 things to know before filing for taxes for people with disabilities
With tax season among us, The Arc provides 5 things that you should know about the different tax credits, deductions, and liabilities affecting families with children and adults with disabilities. This information serves as a general foundation of terms and topics that can help you understand your family's specific situation.
1. Claiming your dependent
You can claim an individual with disabilities as a dependent when:
- they have lived with you for more than half of the tax year
- you have provided at least half of their support for the tax year
- they are either your: child, stepchild, foster child, or a descendant of these
- they are your brother, sister, step-sibling, father, mother, grandparent or other direct ancestor
- they are not filing a tax return of their own
2. Tax credits & exemptions
Depending on your child's age and income, and your personal income, you can clam the following:
- Child tax credit – Available for each qualifying child who will be under the age of 17.
- Child and dependent care tax credit – Married persons must both work, or one must work while the other is a full-time student, has a disability, or is looking for work (provided that the spouse looking for work has earnings during the year).
- Earned income credit – For people who work and have a child meeting the dependent qualifications.
- Personal exemption for dependent – The maximum allowable for tax year 2016 is $4,050. The dependent’s gross income for the tax year must be less than $4,000.
3. Medical deductions
Medical deductions can be considered for both the individual with a disability and the individuals claiming the person with disabilities as a dependent.
- Unreimbursed health care expenses
- Special schooling, training, or therapy
- Educational aides
- Diagnostic evaluations
- Home improvements and/or modifications
- Special medically recommended diets
- Medically recommended conferences and seminars
4. Considerations when filing for yourself
- Impairment-Related Work Expenses deduction – Only if you have a physical or intellectual disability that is a functional limitation to employment or that substantially limits one or more major life activities.
- Elderly and disabled tax credit – Available to every U.S. citizen, who is 65 or older at any time during the tax year or under 65 and are retired on permanent and total disability under an employer’s plan.
5. Special Needs Trusts & ABLE accounts
- Special needs trusts (SNTs) and ABLE accounts are two important financial planning tools that can significantly contribute to an individual’s quality of life. It is important to understand tax liability for each.
*This overview is not intended as tax advice. Individuals with disabilities and their families should consult a tax professional about their specific circumstances.
The Special Needs Alliance (SNA)® is a national non-profit comprised of attorneys who assist individuals with special needs, their families, and the professionals who serve them. SNA is partnering with The Arc to provide educational resources, build public awareness, and advocate for policies on behalf of people with intellectual/developmental disabilities and their families.