Chapter 14: Disability Tax Provisions and Special Discounts
Section 1: Federal Tax Provisions
Important: Tax and benefit provisions are subject to change based on law and rule revisions that occur from time to time. Update yourself on provisions of interest by checking with the information sources provided.
United States Internal Revenue Service (IRS)
Information resource for tax forms, publications and assistance. You can also order forms and publications from the IRS by mailing your request to: Central Area Distribution Center, P.O. Box 8903, Bloomington, IL 61702-8903.
IRS Accessible "Speech-Friendly" or "Talking Tax Forms" in PDF Format
Work Opportunity Tax Credit [Business]
This is a credit for businesses that hire people from certain targeted groups. One targeted group consists of vocational rehabilitation referrals. These are individuals who have a physical or mental disability that results in a substantial handicap to employment. Congress usually authorizes the WOTC (previously called the Targeted Jobs Tax Credit or TJTC) for a limited time period, and must reauthorize it frequently. Sometimes the Credit expires before Congress renews it, and then employers must wait for Congressional action to extend the Credit plus make it retroactive. Check with the Oklahoma Employment Security Commission for current information on the WOTC and how to take it. IRS Publication 334 (Tax Guide for Small Business) also covers WOTC. For detailed information go to the the Oklahoma Employment Security Commission on Work Opportunity Tax Credit..
Child and Dependent Care Tax Credit [Individual]
A credit of up to 35% of what a person spends on child care for children under 13 or on care for a spouse or other dependent who is not able to care for himself or herself. These expenses must be necessary to allow the taxpayer to work or look for work. For more detailed information, follow this link to Publication 503, www.irs.gov/publications/p503/index.html.
Earned Income Tax Credit [Individual]
The earned income credit (EIC) is a tax credit for certain people who work and have earned income under $38,348.Publication 596 contains detailed information, follow this link, www.irs.gov/publications/p596/index.html.
Impairment-Related Work Expenses [Individual]
If you are an employee and have a physical or mental disability that functionally limits your employment, or a physical or mental impairment that substantially limits one or more of your major life activities, you may be able to claim impairment-related work expenses. These are your allowable business expenses for attendant care at your workplace and other expenses in connection with your workplace that are necessary for you to work. If you have impairment-related work expenses, complete Form 2106, Employee Business Expenses, or Form 2106-EZ, Unreimbursed Employee Business Expenses, and attach it to your Form 1040. Publication 529, Miscellaneous Deductions, contains more detailed information, follow this link, www.irs.gov/publications/p529/ix01.html.
Medical Expenses Tax Deductions [Individual]
You may deduct medical and dental expenses for you, your spouse and dependents, if you itemize deductions. Medical expenses can include the cost of transportation for medical care and the cost of health insurance premiums you yourself pay. You cannot deduct medical and dental expenses that were paid by your insurance.
Medical expenses can include payments you made for:
- artificial limbs, eyeglasses, hearing aids;
- the part of the cost of braille books and magazines that is more than the price of regular printed editions;
- the cost and repair of special telephone equipment for deaf and hard of hearing persons;
- equipment for receiving closed captioning;
- the cost and care of a guide dog or other assistance animal;
- a therapist who gives "patterning" exercises to a mentally retarded child;
- special schools, if the main reason for using a school is its resources for relieving a mental or physical disability;
- accessibility modifications to your home that do not increase its value if the main purpose is medical care.
You can deduct only that part of your medical and dental expense that is more than 7.5 percent of your adjusted gross income. This deduction does not apply if you do not itemize deductions, but instead use the standard deduction. Publication 502, Medical and Dental Expenses, contains more detailed information, follow this link, www.irs.gov/pub/irs-pdf/p502.pdf.
Social Security Income: When is it taxable? [Individual]
If the only income you received during the year was Social Security, your benefits are usually not taxable. However, if you received income during the year in addition to Social Security, part of your benefits may be taxable if all of your other income plus half of your Social Security benefits is more than
- $25,000 if you are single, head of household or qualifying widow(er);
- $25,000 if you are married filing separately, and living separately;
- $32,000 if married filing jointly; or
- $ -0- if married filing separately and living with spouse at all in the year.
IRS Publication 915 contains more detailed information on when Social Security income is taxable. Publication 915, Social Security and Equivalent Railroad Retirement Benefits, contains more detailed information, follow this link, www.irs.gov/pub/irs-pdf/p915.pdf.
Tax Credit for the Elderly or Disabled [Individual]
This tax credit may be available to persons age 65 and over and to persons who retired on permanent and total disability. Eligibility for the credit based on disability is complicated. The person must have retired on disability prior to mandatory retirement age; the person must be receiving taxable disability income as from an employer disability insurance; and the person must not be able to engage in "substantial gainful activity." Working full or part time for minimum wage could exclude a person from eligibility for the credit. Only low income persons are eligible for the credit. For detailed information refer to IRS Publication 524 by following this link, www.irs.gov/publications/p524/index.html.
Tax Highlights for Persons with Disabilities [Individual]
This publication gives you a brief introduction to certain parts of the tax law of particular interest to people with disabilities and those who care for people with disabilities. It includes highlights about:
- Itemized deductions,
- Tax credits,
- Household employees, and
- Business tax incentives.
Follow this link to the above mentioned publication, www.irs.gov/publications/p907/index.html.
To correct, update or add resource listings notify:
Oklahoma Department of Rehabilitation Services
Public Information Office | Dana Tallon | Oklahoma Disability Resource Guide Editor