What Deductions or Credits May Apply to Taxpayers with a Disability or their Caretakers?
The following deductions or credits may apply to taxpayers with a disability or their caretakers:
Who can claim this deduction?
Taxpayers can deduct medical and dental expenses for themselves, their spouse, and dependents.
What does the IRS consider a medical expense?
Medical expenses include:
Additionally, this deduction includes cost of transportation for needed medical care and payments for medical insurance.
Are there limitations on this deduction?
Yes. This deduction can only be claimed if:
How can I claim this deduction?
The Medical Expense Deduction is reported on schedule A of Form 1040.
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Impairment-Related Work Expense Deduction
Who can claim this deduction?
Taxpayers with a mental or physical disability can claim this deduction. This physical or mental disability must functionally limit employment or substantially limit one or more major life activities.
What is considered a work-related expense?
This includes allowable business expenses for attendant care at the taxpayer?s place of work and other expenses in connection with the taxpayer?s workplace that are necessary for him or her to work.
Are there limitations on this deduction?
Yes. In order to take this deduction, the taxpayer must itemize deductions. However, this deduction is not subject to the two percent AGI threshold for work-related expenses.
How can I claim this deduction?
If you are self-employed, the business expenses should be deducted on the appropriate form (Schedule C, C-EZ, E, or F), which is used to report your business income and expenses. Employees complete Form 2106, Employee Business Expenses, or Form 2106-EZ, Unreimbursed Employee Business Expense.
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Credit for the Elderly or Disabled
Who can claim this credit?
A taxpayer can claim this tax credit if he or she is age 65 or older, or is permanently unable to work and receives disability compensation.
Are there limitations on this credit?
Yes. The initial amount creditable is reduced by certain nontaxable Social Security Benefits and other nontaxable benefits and some part of the taxpayer?s adjusted gross income. The creditable amount varies depending on the taxpayer?s circumstances, such as marital status and if one or both spouses qualify for the credit.
How can I claim this credit?
The credit can be claimed on Form 1040 or Form 1040A using either Schedule R, Credit for the Elderly or the Disabled, or Schedule 3, Credit for the Elderly or Disabled for Form 1040A Filers, to figure the credit.
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Child and Dependent Care Credit
Who can claim this credit?
The taxpayer can take this credit if he or she pays a person to provide care to a dependent under the age of 13, a dependent who is unable to care for him or herself, or a spouse who is unable to care for him or herself.
Are there limitations on this credit?
Yes. The credit is only available for 35 percent (or less, depending on adjusted gross income) of the taxpayer?s dependent care expenses, with a maximum of $3,000 for one qualifying individual and $6,000 for two or more qualifying individuals. The expenses also are limited to the lesser of the spouses? earned income amounts for the taxable year.
How can I claim this credit?
Taxpayers can claim this credit on Form 1040 or Form 1040A using either Form 2441, Child and Dependent Care Expenses, or Schedule 2, Child and Dependent Care Expenses for Form 1040A Filers.
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Earned Income Tax Credit (EITC)
Who can claim this credit?
The taxpayer can take this credit if he or she has earned income from work and meets certain other rules. Generally, an individual has earned income if he or she receives a Form W-2 from an employer or is self-employed and files a Schedule C. Generally, receipt of an EITC refund will not impact a taxpayer?s federal benefits. Additionally, receipt of Social Security benefits, Medicaid, or Veterans benefits will not prevent an individual from claiming this credit.
Are there limitations on this credit?
Yes. In general, the credit is available only to taxpayers with earned income (and adjusted gross income) under $12,880 if the taxpayer does not have a qualifying child. If the taxpayer has one qualifying child, the taxpayer's income must be under $33,995, and if the taxpayer has more than one qualifying child, the taxpayer's income must be under $38,646. These amounts are greater for married couples filing a joint return. To be a qualifying child, a child must meet certain requirements, including relationship, age, and residency. The child must generally be under age 19, but may be any age if permanently and totally disabled.
How can I claim this credit?
Taxpayers can claim this credit on Form 1040, Form 1040A, or Form 1040-EZ (if claiming the credit without a qualifying child). Taxpayers claiming the credit with a qualifying child must also complete and attach Schedule EIC, Earned Income Credit, to the return.
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