Tax Benefits & Free Tax Preparation for Taxpayers with Disabilities - Disabilityt.gov blog

By Guest Blogger Richard Keeling, Senior Tax Analyst, Stakeholder Partnerships Education and Communications, Wage and Investment Division, Internal Revenue Service (IRS)

Taxpayers with disabilities and parents of children with disabilities may qualify for a number of IRS tax credits and benefits. If you or someone else listed on your federal tax return has a disability, you may be eligible for one of the tax credits listed below. In addition, there are several programs that can help people with disabilities prepare their taxes and file them electronically for free.

1. Standard Deduction: Taxpayers who are legally blind may be entitled to a higher standard deduction on their tax return.
2. Gross Income: Certain disability-related payments, Veterans Administration disability benefits and Supplemental Security Income (SSI) are excluded from gross income.
3. Impairment-Related Work Expenses: Employees who have a physical or mental disability limiting their employment may be able to claim business expenses in connection with their workplace. The expenses must be necessary for the taxpayer to work.
4. Credit for the Elderly or Disabled: This credit is generally available to certain taxpayers who are 65 and older, as well as to certain taxpayers with disabilities who are younger than 65 and are retired on permanent and total disability.
5. Medical Expenses: If you itemize your tax deductions using Form 1040, Schedule A, you may be able to deduct medical expenses. See IRS Publication 502, Medical and Dental Expenses.
6. Earned Income Tax Credit (EITC): EITC is available to taxpayers with disabilities, as well as to the parents of a child with a disability. If you retired on disability, taxable benefits you receive under your employer’s disability retirement plan are considered earned income until you reach minimum retirement age. The EITC is a tax credit that not only reduces a taxpayer’s tax liability but may also result in a refund. Many working individuals with a disability who have no qualifying children, but are older than 25 and younger than 65, do qualify for EITC. Additionally, if the taxpayer’s child has a disability, the age limitation for the EITC is waived. The EITC has no effect on certain public benefits. Any refund you receive because of the EITC will not be considered income when determining whether you are eligible for benefit programs, such as Supplemental Security Income and Medicaid.
7. Child or Dependent Care Credit: Taxpayers who pay someone to care for their dependent or spouse, so they can work or look for work may be entitled to claim this credit. There is no age limit if the taxpayer’s spouse or dependent is unable to care for themselves.

For more information on tax credits and benefits available to taxpayers with disabilities, see Publication 3966, Living and Working with Disabilities or Publication 907, Tax Highlights for Persons with Disabilities, available on the IRS website at http://www.irs.gov/ or by calling 800-TAX-FORM (800-829-3676).

The IRS Volunteer Income Tax Assistance Program (VITA) and the Tax Counseling for the Elderly (TCE) Programs offer free tax help for taxpayers who qualify.


Trained community volunteers may help with special credits, such as EITC, Child Tax Credit and Credit for the Elderly or Disabled. In addition to free tax return preparation assistance, most sites also offer free electronic filing (e-filing). Individuals taking advantage of the e-file program will receive their refunds in half the time compared to returns filed on paper – even faster when tax refunds are deposited directly into one's bank account.

Volunteer Income Tax Assistance Program (VITA)
The VITA Program offers free tax help to people with low to moderate-income (generally, $49,000 and below) who cannot prepare their own tax returns. Certified volunteers (sponsored by various organizations) receive training to help prepare basic tax returns in communities across the country. VITA sites are generally located at community and neighborhood centers, libraries, schools, shopping malls and other convenient locations. Most locations also offer free electronic filing. To locate the nearest VITA site, call 1-800-906-9887 or visit the VITA site list online. (This list does not include every VITA site.)

Tax Counseling for the Elderly (TCE)
The TCE Program provides free tax help to people ages 60 and older. Trained volunteers from nonprofit organizations provide free tax counseling and basic income tax return preparation for senior citizens. These volunteers are often retired individuals associated with nonprofit organizations that receive grants from the IRS. As part of the TCE Program, AARP offers the Tax-Aide counseling program at more than 7,000 sites nationwide during the filing season. Trained and certified AARP Tax-Aide volunteer counselors help people of low-to-middle income, with special attention to individuals ages 60 and older.
For more information on TCE, call 1-800-829-1040. To locate the nearest AARP Tax-Aide site, call 1-888-227-7669 or visit AARP's website.

Additional information about tax benefits for people with disabilities is available in the Tax Credits section of Disability.gov.

Richard Keeling is a Senior Tax Analyst in Stakeholder Partnerships Education and Communications in the Wage and Investment Division of the IRS.  His primary responsibility is working with the Taxpayers with Disabilities Program.

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Social Security Administration Announces 2011 Work Incentives Webinar Series: Register Now for January 26th Webinar - Disability.gov

By Dan O’Brien, Acting Associate Commissioner, Office of Employment Support Programs, Social Security Administration

I’m pleased to announce that the Social Security Administration is continuing its successful Work Incentives Webinar Series in 2011. The first webinar is scheduled for Wednesday, January 26 at 3:00 p.m. Eastern time. This 90-minute session will offer Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI) beneficiaries – and their support advocates – information on the work incentives available to them, including the Ticket to Work Program.

If you’re thinking about employment but are concerned about how working may impact your benefits, then attend this webinar to learn more about work incentives, employment networks, protection and advocacy and who to talk to for more information about your specific needs.

The webinars will be offered the fourth Wednesday of every month, and we have some exciting topics in store for later in the year. Registering is easy – visit the Choose Work website or call 866-968-7842/TDD 866-833-2967.
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Disability.gov: A New Federal/Private Model Promotes Financial Well Being for Americans with Disabilities

By Guest Blogger Dr. Johnette Hartnett, Director of Strategic Partnership Development, The National Disability Institute’s Real Economic Impact Tour and Burton Blatt Institute, Syracuse University

Imagine an unlikely partnership between federal agencies, private sector partners, universities and nonprofits, collectively championing the rights of taxpayers with disabilities.

Now, what at first seemed improbable has become reality. Over the past six years, the National Disability Institute’s Real Economic Impact Tour has established a groundbreaking federal/private model for promoting tax education and financial well-being to Americans with disabilities nationwide.

Thanks to key sponsors like Bank of America, AT&T, Walmart, Acorda Therapeutics, Inc. and others, we've delivered funding and asset-building programs to cities in all 50 states. Since 2005, our partnerships with the IRS and 100 community-based organizations have resulted in free tax filing assistance for more than 650,000 taxpayers with disabilities – representing more than $600 million in returns and more than $120 million in saved preparer fees.

Yet, while we’re pleased to celebrate the above milestones as part of the 20th Anniversary of the ADA, we know there’s much work ahead to ensure that all Americans with disabilities have access to the economic mainstream. Especially considering the following:

• 37 million Americans live in poverty, and 13 million are children less than 18 years of age
• 38 million Americans subsist on food stamps
• 50 million Americans, in any given month, are on Medicaid
• 57 percent of unemployed Americans receive unemployment compensation compared to 40 percent before the recession
• 61 percent is the increase in homelessness in America since December 2007
• 40 percent of Americans accessing food shelters and pantries are people on Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI)
• 65 percent of Americans experiencing long-term poverty (greater than a year) are persons with disabilities

The above 65 percent translates into more than 54 million Americans – clearly, not a niche market. In fact, it's a market larger than the United States’ African-American, Latino and Gay markets combined; a market that wields 17 times the spending power of tweens 8-12 years old. It's a market not to be ignored.
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Disability Just Before Retirement Often Leads to Poverty

A patchwork of public programs, including Social Security Disability Insurance, workers’ compensation, Supplemental Security Income, and veterans’ benefits, provides income supports to people with health problems who are unable to work. Yet, many Americans who develop disabilities in their fifties or early sixties fall into poverty. With millions of boomers entering their sixties—when work disability rates peak—it’s time to fix the social insurance safety net for disabled workers.

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SSDI: Collection of Medical Evidence Could Be Improved

What GAO Found Obtaining timely and complete medical records is a challenge to DDSs in promptly deciding disability claims, and DDSs have responded with additional provider contacts and adjustments to their payment procedures. Although DDSs pay most medical providers for medical records and SSA pays the DDSs to cover these expenses, 14 of 51 DDSs reported the percentage of requests for which they did not receive records was 20 percent or more in fiscal year 2007. In response to this challenge, all DDSs conduct follow-up with providers and claimants to urge them to provide records. Over half of the DDSs (34 of 51) have also implemented more timely payments for records and six increased the amount they pay. Although SSA evaluates DDS collection of medical records, it does not compile key data necessary to identify and share promising collection practices. SSA has made progress moving to electronic collection of medical records, but faces challenges in fully implementing electronic retrieval and analysis of medical evidence. SSA now uses electronic images instead of paper copies of new claimants' records. Though SSA seeks to obtain all records electronically and provides options for online submission of records, only one large provider accounts for most of the records submitted online, and about half of all records received are on paper. To date, SSA has taken only limited action to identify and analyze the barriers providers face in using current electronic record submission options, and has not developed a strategy to address them. In the long run, SSA is participating in an advanced prototype to collect medical records in formats that can be searched and analyzed by electronically querying a hospital’s records database and directly retrieving the claimants’ records. What GAO Recommends GAO recommends SSA identify DDS evidence collection practices that may be promising, evaluate their effectiveness, and encourage implementation of successful practices in other states, as applicable. To do so, SSA should cost-effectively compile and assess additional data on the collection process. SSA should also work to identify and address barriers to expanded use of its online medical evidence submission options.

What About the Lowest Income Disabled?

Steve Gold's Information Bulletin #272 (12/08) With all the talk of reforms, it's fascinating that disabled people with the lowest incomes have been either ignored or forgotten. With all the chatter about health reforms, economic stimulus packages, and employment programs, the lowest income disabled people are not mentioned. First, we'll provide some background data, and second some suggestions. [The following data is from the SSA's SSI Annual Statistical Report, 12/2007, Tables 14, 7. D1, and 65 and this data is available for your state.] Disabled Low-Income People 18-64: There were 10,627,905 disabled people ages 18-64 who received Social Security Disability Insurance only, Supplemental Security Income only, or both. These disabled people were among the lowest-income groups in the country. Here's a breakdown of the income of these people. (The federal poverty level in 2007 for one person was $851 monthly and annually $10,210.)

• Social Security disability insurance (SSDI) payments only - 6,405,985 people. Monthly average benefits were $1,063, annually $12,756.
• SSI payments only - 2,966,648 people. Monthly average payments were $595.75, annually $7,149.
• SSDI/SSI both - 1,255,272 people. Monthly average payments for people receiving a combination of SSDI and SSI were $713.90 monthly and annually$8,566.80.

Disabled Low-Income People 65 and Over:

When disabled people ages 18-64 on SSDI reach 65, they convert to the Social Security "aged" category, and separate disability data is not collected any longer. When, however, disabled people on SSI reach 65, they remain a disabled SSI recipient, and disability data is separately maintained. As a consequence, we have data only for SSI disabled people over 65, of whom there were 776,600.

There is a total of 3,743,248 disabled low-income people who receive SSI (the 2,966,648 million disabled people ages 18-64 plus the 776,600 over 65). Adding these people with the SSDI only and SSID/SSI both recipients for a grand total of 11,404,505 disabled people whose incomes are from federal SSI, SSDI, or both programs.

The Last Eleven Years:

• The number of SSDI only recipients increased by 55% since 1996. Average monthly payments increased 43%.
• The number of SSI only recipients increased only 16%. Average monthly payments increased 30%.
• The number of SSDI/SSI both recipients increased 25% since 1996. Average monthly payments increased 31%.

Some ideas for discussion:

1. Health programs

A. Health reforms should consider how Medicare does not pay for much Long-Term Care for the 6,505,985 people who receive SSDI only. These disabled people on Medicare have to impoverish themselves in order to become eligible for and therefore to receive Medicaid's Long Term Care services that the 1,255,272 SSDI/SSI both and 2,966,648 SSI only (under65) and the 776,600 (over 65) disabled people are eligible to receive because they receive SSI. That's nearly 5 million disabled people.

If you are disabled and receive SSDI only and therefore receive Medicare only, you are not automatically eligible for Medicaid and consequently receive substantially less LTC coverage than if you were on SSI or SSDI/SSI.

B. While we're at it, what about Medicare Part LTC for all disabled people. (See Information Bulletin #269). Let's remember that the overwhelming number of the above 11.4 million disabled people do not need or require any LTC services. For those disabled people on SSDI who do require LTC, nearly all will have to impoverish themselves to become eligible for Medicaid, despite having worked most of their lives. Given the modest average monthly payments they receive ($1,063), they cannot afford to pay for LTC insurance and they do not qualify for Medicaid's LTC services.

LTC for all disabled people whose incomes are SSDI, SSI, or both must be addressed. So far, public discussions regarding health reforms have ignored them.

C. And what about prescriptions? The 6.5 million disabled people on SSDI and therefore on Medicare pay a much larger co-pay for their prescriptions under Part D out of their minimal monthly benefits than the nearly 5 million disabled people SSI recipients who either receive their prescriptions under Medicaid without paying or who pay, at most, minimal co-pays.

People with the exact same disabilities receive different health care benefits (whether LTC services or prescriptions) depending solely on a past work history and thus their eligibility for SSI, SSDI, or SSDI/SSI - not based on their needs, impairments, or any other meaningful criterion.

2. Income Inequality - Narrow the Gap

Economic stimulus discussions have focused on roads and bridges for cars and other bricks and mortar programs. None have talked about ensuring that people who are disabled receive at least poverty-level incomes, to say nothing incomes at a decent living standard. The income gap for these low-income disabled people grows wider by year.

Here's what we figure it would cost to bring disabled people up to the minimal poverty level.

Increase the SSI payments by 43% for the nearly 3.7 million people (all ages) on SSI only and increase the payments by 19% for the nearly 1.3 million for the SSDI/SSI (both) category. Annually, this means a monthly increase of $255 for people on SSI and a monthly increase of $137 for people on both SSI/SSDI the total federal expenditures will be far less than what Congress is allocating to the banks and car manufacturers.

Increasing the monthly SSI payments to the poverty level would result in an immediate economic stimulus because these low-income people would have more income for necessities. To survive, they must and will spend all their income.

3. Employment

Many of the total 10.6 million disabled people under 65 (and probably a number of the 776,600 disabled people over 65) want to work, whether full-time or part-time.

Given the archaic employment related restrictions in both the SSI and SSDI income programs and the medical programs and benefits affixed to each these income programs, many disabled people will not jeopardize these benefits by seeking employment.

How about a jobs program for disabled people? Funny? Don't forget that during WWII, when the country needed disabled workers, disabled people were hired in significant numbers.

How about an employment program that would also reduce federal and state Medicaid expenditures by focusing on disabled people to provide community-based personal care services to other disabled people who are currently institutionalized and want to reside in the community. There are people on SSI and/or SSDI who can work IF the archaic employment related restrictions in SSI and SSDI were changed and IF there were meaningful economic incentives.

GAO Report: Social Security Disability

Management Controls Needed to Strengthen Demonstration Projects Over the last decade, SSA has initiated 14 demonstration projects under its authority to test possible DI and SSI policy and program changes; however, these projects have yielded limited information for influencing program and policy decisions. Of the 14 projects, SSA has completed 4, cancelled 5, and had 5 projects in progress as of June 2008. In total, SSA spent about $155 million on its projects as of April 2008, and officials anticipate spending another $220 million in the coming years on those projects currently under way. Yet, these projects have yielded limited information on the impacts of the program and policy changes they were testing. SSA did not conduct impact evaluations for two of its completed projects, and intended to evaluate five other projects, but could not do so because significant challenges led SSA to cancel them. SSA officials believe the five projects currently under way will yield useful information, but it is too early to tell.

Medicare Two Year Waiting Period for People with Disabilities

from Asclepios - Your Weekly Medicare Consumer Advocacy Update by the Medicare Rights Center “A study examining coverage during the waiting period for Americans aged 55-64 found that of those without coverage, about half were uninsured prior to the waiting period. The loss of employer coverage accounted for 36 percent of the uninsured, and 4 percent had lost the Medicaid coverage they had prior to the waiting period due to their SSDI cash benefit.” (Fact Sheet: Medicare Two Year Waiting Period for People with Disabilities, Medicare Rights Center, September 2008).

Hard Times

from Asclepios - Weekly Medicare Consumer Advocacy Update from Medicare Rights Center People, just like banks and insurance companies, sometimes fall on hard times. Sometimes, when the hardship is severe and not of the person’s own doing, we as a society decide, that the government should help out. (Banks and insurance companies get to play by different rules.) For example, people who are hit with an illness or injury that is severely and permanently disabling can qualify for Social Security Disability Insurance (SSDI) payments and, eventually, health coverage through Medicare. Working people all pay into these social insurance programs so that we have health coverage and economic security in the event we become disabled and cannot work. But the health coverage through Medicare does not kick in when we need it most. People with disabilities must wait two years from the day they receive their first SSDI check to receive Medicare benefits. There are currently about 1.5 million people in the two-year waiting period. The poorest receive comprehensive coverage through Medicaid. However, as tax revenues decline in tough economic times, states are often forced to tighten Medicaid eligibility, potentially denying health coverage to people with disabilities. About one quarter—375,000 people with disabilities—are without insurance for the entire waiting period. For many, that means going without care, going into debt or both. Many of the rest—about half of older SSDI recipients—receive coverage through their former employer under the COBRA program. For the first 18 months, they pay 102 percent of the total premium, including the portion their employer used to pay. For the next 11 months, the monthly premium goes up to 150 percent of the total cost. The average annual premium under employer plans is now $12,680 for a family, $4,704 for an individual. 150 percent of $4,704 is $7,056, or $588 per month, tough to pay when the average SSDI check is about $1,000. Besides the premium, many employer plans now carry hefty deductibles—more than one-third of employees in small firms have deductibles greater than $1,000—and many do not cover all the services that people with disabilities need. In short, even people in the waiting period who have coverage still cannot afford health care. But how can we afford to spend billions on health coverage for people with disabilities when we just spent over $1 trillion bailing out financial institutions that made stupid and risky investments with borrowed money? That is a very strange, some would say, backwards, question. The fact that we are even asking this question indicates the skewed priorities in Washington. Most lawmakers from both parties in Washington agree that we “have to” bail out Wall Street to prevent the economy from imploding. They disagree mostly over whether taxpayers can recoup some of their money from the companies we bail out, once they start turning a profit again. But only 23 senators have signed on to S. 2102, “Ending the Medicare Disability Waiting Period Act of 2007.” Senator Barack Obama, Democrat of Illinois, is among the cosponsors. Senator John McCain, Republican of Arizona, is not. Only 98 of the 435 members of the House of Representatives have signed on to HR 154, the House version of the bill. We need to work now so that next year Congress and the new President make it a priority to end the two-year wait for Medicare for people with disabilities. Urge your senators and representatives to cosponsor the “Ending the Medicare Disability Waiting Period Act of 2007.” Tell the story of your experience waiting for Medicare coverage or join the Medicare Rights Center’s effort to end the wait.