Tax breaks are available to offset medical expenses.
Are you or a loved one living with a disability?
If so, you are in good company.
In 2015, the Centers for Disease Control and Prevention estimated about 20 percent of American adults live with a disability.
Medical expenses are high.
This comes as no surprise to you.
Are there ways to save on taxes?
According to a Yahoo Finance article titled“8 Tax Tips for People With Disabilities (and Their Caregivers),” there are.
Use an ABLE accounts.
Were you or your loved one disabled before you turned 26?
If yes, then you can use an ABLE account?
How does it work?
Much like a 529 college savings plan.
The money in the account can grow tax-free and can be used on eligible expenditures.
The benefit is in tax-free growth.
Contributions are not tax deductible on a federal level.
Some states offer state-level tax benefits though.
Take a higher standard deduction.
Are you or your spouse blind?
Taking a standard deduction may be a higher deduction for you.
The normal deduction if single or filing separately?
What if you are blind?
$7,850 if blind or over age 65.
$9,400 if blind and over age 65.
Get child or dependent care credit.
Are you working or seeking work?
Do you pay for day care or other care for a disabled dependent?
You could decrease your taxes by $3,000 per dependent.
The maximum credit is $6,000 for all dependents.
This could also include a spouse who cannot care for himself or herself due to mental or physical challenges.
You will need to itemize to qualify for this credit.
Collect disability credit.
Are you 65 or older?
Do you receive stable disability income?
Are you retired and on permanent and total disability?
If yes, you could qualify for the Credit for the Elderly or the Disabled on your own tax return.
How much is the credit?
It ranges between $3,750 and $7,500.
There are income limits to qualification though.
Claim a disabled person as a dependent.
The usual age limit for dependents are after age 19, or age 24 if the child is a student.
What if the child is disabled?
There is no age limit.
The only requirement is that you must pay for at least half of the support for the child.
Deduct medical expenses.
Itemize your tax returns.
If the medical expenses for your family are more than 10 percent of your adjusted gross income in a calendar year, then you can deduct the amount exceeding 10 percent.
If you or your spouse is 65 or older, the percentage is lower at 7.5 percent.
Adopt of a child with special needs.
Have you adopted a child with special needs?
These young ones can be such a joy.
Another benefit besides your sweet child?
You could be eligible for the maximum adoption credit in the year you finalize the adoption.
The current maximum is $13,460.
Your income limits will also factor into the amount.
The good news?
You could qualify regardless whether you had $13,460 in qualified expenses.
Declare disability payments.
Not all disability payments are considered taxable income.
You will want to research what is or is not subject to taxes.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: Yahoo Finance (February 15, 2017) “8 Tax Tips for People With Disabilities (and Their Caregivers)”