IRS tax breaks for people with disabilities are available.
By Herb Drill
While the income-tax code is 1.3 million words—more than twice the length of Leo Tolstoy’s War and Peace—the code includes numerous breaks for individuals with disabilities and businesses which might employ them, the Tax Foundation reveals.
Among tax credits and benefits for people with disabilities (PWD) are:
- Impairment-related work expenses (Publication 529).
- Disability-related conferences (Revenue Ruling 2000-24).
- Education credits (Publication 970).
To encourage more employers to hire PWD, IRS stresses its business tax incentives:
- Barrier-removal tax deduction (Publication 535).
- Disabled Access Credit (Publication 535/Form 8826) is for an eligible small business which incurs expenses to provide access to PWD.
In Atlanta, Internal Revenue Service Senior Tax Analyst Richard Keeling, a quadriplegic, notices more PWD, their families, and employers utilizing favorable tax rules for PWD. This “empowers and advances self-directed economic security,” he says.
Keeling, with the Stakeholder Partnerships, Education and Communication (SPEC) program, lists his top priority as the Taxpayers with Disabilities program. It provides more access to tax data, free tax preparation for disabled taxpayers, and improves economic well-being.
He views the key program “customers” as those earning less than $40,000, Americans 60 and up, those with limited English proficiency, Native Americans, and PWD. The mission is to help people pay their taxes while “building and maintaining partnerships and informing, educating, and communicating.” This includes explaining EITC, which, Keeling contends, “lifts more than 5 million individuals out of poverty each year, including 2.6 million children.” Unfortunately, studies show up to 25% of those eligible don’t claim the EITC, leaving billions of dollars unclaimed each year.
Incentive to Work
Keeling explains the EITC is a refundable federal income-tax credit for working people and families. “Congress originally approved this legislation in 1975 in part to offset the burden of Social Security taxes and to provide an incentive to work,” he says. “When EITC exceeds the amount of taxes owed, it results in a tax refund to those who claim and qualify for the credit.”
The maximum Adjusted Gross Income (AGI) you can have and still get the credit has increased.
You may be able to take the EITC if:
- A child lived with you and you earned less than $38,646 ($41,646 if married filing jointly), or
- A child didn’t live with you and you earned less than $12,880 ($15,880 if married filing jointly).
The maximum investment income you can have and still get the credit has increased to $2,950. EITC has “no effect on certain welfare benefits” and, in most cases, payments “will not be used” to determine eligibility for Medicaid, food stamps, Supplemental Security Income, low-income housing, or most Temporary Assistance for Needy Families payments. Eligibility can be set using “EITC Assistant,” in English and Spanish (www.irs.gov).
Regarding free tax preparation, Keeling underscores its relevance due to complexity of tax law and says preparation fees “erode the value of refunds.”
Meanwhile, Dr. Johnette Hartnett says the Law, Health Policy & Disability Center (LHPDC) Asset Accumulation and Tax Policy Project ties organizations serving PWD to financial institutions that study barriers and opportunities of tax and public policies. She believes this “will improve economic independence, social empowerment, and community integration” for PWD. She is LHPDC’s public policy director at the University of Iowa’s School of Law.
Asset accumulation includes opening bank accounts for those who don’t have basic financial management strategies, offering financial literacy workshops to explain benefits of savings accounts, and the disadvantages of not using mainstream fi nancial institutions.
Fear of Losing
Dr. Hartnett supports “building a road map out of poverty” for 54 million PWD in 22 million families. The latest Cornell University Disability Status Report found 22 million PWD are of working age— only 7.6 million work. Research among 3,199 filers with disabilities at free tax-preparation sites shows only 30% have a checking account; 12% a savings account; 24% with checking and savings; 37% pay for a check casher; 25% receive EITC, and 57% need special accommodations to file taxes and do banking.
“Fear of losing public benefits if they save, file taxes, and/or work due to income/savings limits allowed prevails,” Dr. Hartnett adds. “We find a lack of awareness of needs of customers (with disabilities),” she says. What’s needed is “more information” about Social Security work incentive provisions and, for people on SSI, more information about making financial services and products “more accessible,” plus more about developing “alternative formats for universal access—e.g., FDIC Money Smart program in Braille.”
Keeling and Dr. Hartnett assert that with so many PWD unemployed, some have turned to self-employment. Working out of your home doesn’t mean you can deduct it automatically. IRS allows a home office deduction when you telecommute at an employer’s convenience; the space is used exclusively for business, and you’re self-employed and your deduction isn’t more than what you earn.
Also, IRS offers a free Tax Calendar for Small Businesses and Self-Employed Individuals. It shows changes in deductible mileage rates, business tips, how to organize a business, travel expenses, accounting methods, and tracking records. There’s data on IRS and Social Security Administration customer assistance, electronic filing/paying options, publications/ forms, federal holidays, etc. Check Publication 1518 in English and Spanish and at the Small Business Self-Employed pages at www.IRS. gov. Printed copies can be ordered online, or call 800-829-3676.
If you employ PWD, incentives are available to encourage Americans with Disabilities Act (ADA) compliance. Ask whether your state offers these incentives. The Rockville, MD-based Mid-Atlantic ADA & IT Information Center states: “Unfortunately, many business owners and employers are unaware incentives exist.”
On Your Side
Oops! You’ve discovered an error after you filed. You may need to amend your return. You should file an amended return if any of the following were reported incorrectly: filing status, number of dependents, total income, deductions, or credits.
Use Form 1040X-Amended U.S. Individual Income Tax Return to correct previously-filed Form 1040, 1040A, 1040EZ, or electronically- filed return. Enter the year of the return you’re amending at the top of Form 1040X. If you’re amending more than one tax return, prepare a 1040X for each return and mail them in separate envelopes to the IRS processing center for the area in which you live.
Are you having problems with the IRS? Contact the Taxpayer Advocate Service: free, confidential, tailored, and available for businesses and individuals. There’s at least one advocate in each state, the District of Columbia, and Puerto Rico.
Advocates know the system. Call the hotline at 877-777-4778, or 800-829-4059 (TTY/TTD). You’ll find the service’s address and phone number among the government listings in your telephone directory.
Did you get an audit notice? See Publication 594-What You Should Know about the IRS Collection Process. Information about penalties and interest charges is available in Publication 17-Your Federal Income Tax. Both publications are available at www.IRS.gov, or by calling 800-TAX-FORM (800-829-3676).
More resources, among others, are the U.S. Office on Disability, Federal Deposit Insurance Corp. (FDIC), and the LHPDC. Also, tax credits are listed on the National Women’s Law Center’s Tax Credits Outreach Campaign Web site (www.nwlc.org). You click on Tax & Budget. For more data, try:
- IRS questions 800-829-1040 (V)/829-4059 (TTY), www.irs.gov
- U.S. Dept. of Justice Disability tax packet www.ada.gov/taxpack.htm
- Richard Keeling: IRS, 401 Peachtree St., NW, STOP-WI-50, Atlanta, GA 30308, richard.keeling@irs.gov.
For authoritative, legal tax advice, consult the IRS or a licensed, qualified and recommended tax advisor. The Office of the U.S. Attorney warns, “A willful failure to pay taxes isn’t an oversight. It’s a crime. Tax fraud is even more serious when it is committed by someone with a professional obligation to see that taxes are filed correctly.”
In his wheelchair in Jacksonville, FL, Herb Drill (herbdrill@ableme.com) heads Able Me & Associates. He has Muscular Dystrophy.
