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The disability tax credit, officially known as the Tax Credit for the Elderly or Disabled, is a federal tax credit available to certain older adults and younger individuals with disabilities. You must meet income and filing requirements set by the IRS to qualify. This tax credit provides financial relief by reducing the total amount of tax owed.
This disability tax credit is available in the United States, including North Carolina and South Carolina. It provides significant financial relief for individuals and families living with qualifying disabilities. As Rutherfordton Social Security Disability lawyers, our team is happy to share information about this and other tax credits that could help your family.
Understanding the Tax Credit for the Elderly or Disabled
The U.S. federal government provides the Tax Credit for the Elderly or Disabled as a credit on your income taxes. If you are disabled, you may qualify for this tax benefit. The credit helps to offset the additional expenses you face because of your disabilities, including medical costs, specialized equipment, and personal care services.
The Tax Credit for the Elderly or Disabled does not provide a direct payment. Instead, you apply for it as a part of filing your income taxes and it reduces the amount of tax you owe. This can sometimes mean you pay significantly less or receive a much larger refund based on your return.
Why this Tax Credit for the Disabled is Important
The financial burden of living with a disability can be overwhelming. The Tax Credit for the Elderly or Disabled provides much-needed relief for individuals and families. It allows those who qualify to allocate more money toward necessary care and accommodations instead of paying it to the IRS.
The Tax Credit for the Elderly or Disabled may be especially important for lower-income individuals or families who struggle to pay for out-of-pocket needs, including additional therapies, accessibility renovations, and tools to improve independence. Not all disability-related costs are covered by insurance, including many that can greatly improve quality of life.
Eligibility Requirements for the Disability Tax Credit
To qualify for the IRS tax credit for the disabled, you must meet specific criteria. This includes one of the following:
You must meet the age or disability requirements. You must either:
- Be 65 or older at the end of the tax year
- Be under 65 but permanently and totally disabled before the end of the tax year
Additionally, you must meet certain income limits. These include:
- Having taxable disability income
- Meeting the current income limits
The income limits include your adjusted gross income (AGI) and nontaxable income, such as Social Security retirement or disability, and must fall below the current limit. The IRS updates these limits each year.
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How Much is the Tax Credit for the Elderly or Disabled?
According to the IRS, the credit can fall between $3,750 and $7,500. The actual amount of your tax credit could vary based on:
- Your filing status
- Your income level
- The amount of nontaxable Social Security, pensions, annuities, or disability benefits you received
You will learn how much your tax credit will be by completing the 1040 Schedule R as a part of filing your federal income taxes.
Applying for the Tax Credit for the Elderly or Disabled
You will apply for the Tax Credit for the Elderly or Disabled when you file your federal income taxes. This process includes:
- Completing 1040 Schedule R: This is an additional form you will need to complete to calculate the amount of your Elderly or Disabled tax credit. You will need to provide information about your disability, income, and filing status.
- Having Medical Evidence to Prove Your Disability: You must have medical records that confirm your disability. This includes a physician’s statement or other documents that support you having a permanent and total disability that prevents you from working. If you receive Social Security Disability, you should qualify if you meet income requirements.
- Filing Your Taxes: Once your Schedule R form and medical documentation are in order, you can file your federal income tax return as usual, including the information about the tax credit.
- Following Up: After submitting your tax return, the IRS will review your taxes. If additional information is needed or there are issues with your claim, you will likely receive a letter from the IRS.
The Importance of the Tax Credit for the Elderly or Disabled in NC and SC
While the Tax Credit for the Elderly or Disabled is a federal tax credit, both North Carolina and South Carolina recognize that families and individuals living with disabilities need additional financial support. State tax laws could provide additional benefits for some filers.
When states provide state-level decisions for income taxes, they can be used in addition to the Tax Credit for the Elderly or Disabled to further reduce the tax burden. This means you could pay less on both your state and federal taxes if you meet the criteria for these credits.
Working with a tax professional who handles income taxes in your state is the best way to ensure you are aware of federal and state tax laws that could help you save money by using all possible tax benefits.
Discuss Your Disability-Related Legal Matters with Our Team
At Farmer & Morris Law, PLLC, we help clients who are living with disabilities file for Social Security Disability benefits. We also represent clients whose benefits were denied. We have several offices in NC and SC to serve you, including:
- Hendersonville, NC
- Rutherfordton, NC
- Morganton, NC
- Shelby, NC
- Spartanburg, SC
Contact us today for a free consultation. Our South Carolina Social Security disability lawyers are here to help you.
