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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Career Connection Series: Ready to Choose Work? You May Already Have a Ticket - Disability.gov

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By Dan O’Brien, Acting Associate Commissioner, Office of Employment Support Programs, Social Security Administration
 
What is Ticket to Work?

Social Security’s Ticket to Work is a voluntary program that helps people with disabilities who want to work by providing them with free support services. If you are between the ages of 18 and 64 and are receiving Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI), you already qualify.

While you explore your work options or go back to school, the Ticket Program and special rules, called Work Incentives, help you stay in control of your healthcare and cash benefits. For example, cash benefits don’t stop until you earn a certain amount of money (this is called Substantial Gainful Activity or SGA). The goal is that one day you can be financially independent.

Learn how the Ticket to Work Program and Work Incentives might be right for you:
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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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Upcoming Medicare Change is an Opportunity to Enroll Eligible Low-Income Seniors in Food Stamps — Center on Budget and Policy Priorities

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The Medicare Part D Low-Income Drug Subsidy (LIS), Medicare Savings Programs (MSPs), and Food Stamps[1] can play important roles in improving the health and well-being of low-income seniors and people with disabilities. Together, these programs can provide several thousand dollars a year in benefits and can significantly increase a low-income Medicare beneficiary’s ability to make ends meet.

Unfortunately, all three programs suffer from very low participation rates among Medicare beneficiaries who are low-income, but not so poor that they qualify for Supplemental Security Income (SSI) and Medicaid. Many low-income Medicare beneficiaries do not know that they can qualify and receive substantial benefits from these programs. For others, the complexity of the eligibility rules and difficulties in enrolling, the differences between program requirements, or the stigma associated with seeking help all serve as barriers.

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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.

Medicaid Buy-In Reports

How Do Employment Outcomes of Medicaid Buy-In Participants Vary Based on Prior Medicaid Coverage? An Example from Massachusetts This brief, the eighth in a series on working with disability, looks at the employment outcomes of participants in CommonHealth Working (CHW), Massachusetts’s Medicaid Buy-In program. Differences in post-enrollment employment rates, monthly hours worked and earnings, and private health insurance coverage are compared between new CHW enrollees previously covered by MassHealth, Massachusetts’s Medicaid program, and those without prior MassHealth coverage. How Do Medicaid Buy-In Participants Compare with Other Medicaid Enrollees with Disabilities? Answering the question posed in the title is one key to evaluating Medicaid Buy-In (MBI) programs. This issue brief, the fifth in a series on workers with disabilities, compares demographics, health status, and expenditures between these groups. Significant areas of difference that were identified are race, gender, diagnoses, and expenditures. Interaction of Medicaid Buy-In and other Federal Efforts to Improve Access to Health Coverage for Adults with Disabilities The Medicaid Buy-In (MBI), Social Security Disability Income (SSDI), and Supplemental Security Income (SSI) programs all provide workers with disabilities options to maintain health coverage if they earn too much for Medicaid or Medicare benefits. The first issue brief explains how these programs compare and interact in terms of eligibility, coverage, populations, and enrollment. The second examines how MBI participants that collect SSDI utilize SSDI work incentives. Program Interaction PDF Dual Eligibles PDF

Cost-of-Living Increase and Other Determinations for 2009

The Social Security Administration has determined-- (1) A 5.8 percent cost-of-living increase in Social Security benefits under title II of the Social Security Act (the Act), effective for December 2008; (2) An increase in the Federal Supplemental Security Income (SSI) monthly benefit amounts under title XVI of the Act for 2009 to $674 for an eligible individual, $1,011 for an eligible individual with an eligible spouse, and $338 for an essential person; (3) The student earned income exclusion to be $1,640 per month in 2009 but not more than $6,600 in all of 2009; (4) The dollar fee limit for services performed as a representative payee to be $37 per month ($72 per month in the case of a beneficiary who is disabled and has an alcoholism or drug addiction condition that leaves him or her incapable of managing benefits) in 2009; (5) The dollar limit on the administrative-cost assessment charged to attorneys representing claimants to be $83 in 2009; (6) The national average wage index for 2007 to be $40,405.48; (7) The Old-Age, Survivors, and Disability Insurance (OASDI) contribution and benefit base to be $106,800 for remuneration paid in 2009 and self-employment income earned in taxable years beginning in 2009; (8) The monthly exempt amounts under the Social Security retirement earnings test for taxable years ending in calendar year 2009 to be $1,180 and $3,140; (9) The dollar amounts (``bend points'') used in the primary insurance amount benefit formula for workers who become eligible for benefits, or who die before becoming eligible, in 2009 to be $744 and $4,483; (10) The bend points used in the formula for computing maximum family benefits for workers who become eligible for benefits, or who die before becoming eligible, in 2009 to be $950, $1,372, and $1,789; (11) The amount of taxable earnings a person must have to be credited with a quarter of coverage in 2009 to be $1,090; (12) The ``old-law'' contribution and benefit base to be $79,200 for 2009; (13) The monthly amount deemed to constitute substantial gainful activity for statutorily blind individuals in 2009 to be $1,640, and the corresponding amount for non-blind disabled persons to be $980; (14) The earnings threshold establishing a month as a part of a trial work period to be $700 for 2009; and (15) Coverage thresholds for 2009 to be $1,700 for domestic workers and $1,500 for election workers.

H.R. 2608: SSI Extension for Elderly and Disabled Refugees Act

An act to amend section 402 of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 to provide, in fiscal years 2009 through 2011, extensions of supplemental security income for refugees, asylees, and certain other humanitarian immigrants, and to amend the Internal Revenue Code of 1986 to collect unemployment compensation debts resulting from fraud. Sponsor: Rep. James McDermott Status: Introduced Jun 7, 2007 Amendments (2 proposed) [details] Passed House [details] Jul 11, 2007 Passed Senate Aug 1, 2008 Sep 30, 2008: Signed by President and became Public Law No: 110-328.

SSI - Some Suggestions to Improve the Lives of 7 million people.

By Steve Gold, The Disability Odyssey continues A recent report from the bipartisan Social Security Advisory Board (Issue Brief #4) raised some important issues regarding Supplemental Security Income, the federal grant program that provides monthly grants to at least five million very low-income people with disabilities and nearly two million older Americans. SSI is a poverty program, and many of its provisions make sure people stay in poverty! Here's what the Advisory Board presented to improve SSI: First, in order to receive the full federal SSI grant, a person currently may keep only $20 of any income (a "general exclusion") and may also have an "earned income exclusion" of only the first $65 of earnings and half of the amount above $65 a month. These "exclusions" were in the original legislation more than 30 years ago and have never been increased. If advocates had successfully organized and demanded that these exclusions keep up with inflation, then they would be up to $87 a month for the general exclusion and earned income exclusion would be $284. Using the Average Wage Index, instead of the general inflation index, the general exclusion would now be $105 and the earned income exclusion would be $342a month. Until Congress increases these exclusions, people on SSI have tremendous disincentives to work and will remain far below the federal poverty level. Second, in 1989 the asset limit was increased so that an individual could have no more than $2,000 in assets and a couple only $3,000. Remember,these assets were supposed to help SSI recipients cover emergencies that a monthly SSI grant could not cover, e.g., a broken chair lift, car repairs,broken dishwasher, uncovered medical costs. If these 1989 costs had kept up with inflation, an individual would be able to keep $3,500 and a couple$5,250. If they were adjusted to the Average Wage Index, they would now be$4,200 for an individual and $6,300 for a couple. Third, when SSI was originally enacted, a married couple on SSI was presumed to be able to live more economically than two people living alone. That's why a SSI grant for a couple is only one-and-a half times the individual rate. As the Social Security Advisory Board stated, "two single adult SSI beneficiaries who live together are each eligible for a full individual benefit, while each member of a married couple is eligible for three-fourths of the full benefit amount." What an incentive to get divorced or not marry another disabled person, or maybe disabled people are not supposed to marry at all. Fourth, SSI does not recognize the "additional household costs caused by the disability of a beneficiary." These additional costs include ability to pay rent for an accessible unit, for a reasonable accommodation, or higher utility bills or to meet special dietary requirements. People with disabilities have higher out of pocket health expenditures than non-disabled persons. SSI benefit rates do not reflect these additional needs. These four issues do not address the fundamental problem that the federal SSI grant levels are currently and have been historically far below the poverty level.(See Information Bulletin #197A). Despite we're dealing with seven million people on SSI, it's amazing that these issues do not seem to be on the radar of national disability advocates or national disability organizations. What would it take to have a coalition that could convince Congress to make statutory changes that would significantly improve the lives of the five million poorest people with disabilities and two million older Americans? Where are our Congressional leaders? Where are our DC disability and elderly leaders? Where are our national disability organizations? To contact Steve Gold directly, write to stevegoldada@cs.com