If You Are Permanenty Disabled, This Tax Credit May Work for You


One of the reasons people are afraid to do their own taxes is they are afraid they’ll miss out on some deductions and credits.  It’s true, while there are a lot of prominent tax credits and deductions out there, there are even more lesser-known tax breaks to be claimed.

One of these is the disability tax credit.  If you are disabled you may qualify.  However, it’s not automatic and there are a few requirements you must meet in order to claim this tax credit.

How To Qualify for the Disability Tax Credit

  1. First of all you must be a U.S. citizen or a resident alien.  If you are the latter, then you probably know what that is.  But for the rest of you, a resident alien is a person who is  a permanent resident of the United States according to immigration law (you have a green card) and you must have been physically present in the US for a minimum amount of time.  For details, see the IRS website page on Resident Aliens here.
  2. Second, the disability tax credit is for people who are not yet of retirement age.  You must be under the age of 65 for the entire tax year for which you are claiming the credit.  You must also be younger than the mandatory retirement age set by your company.  This age will vary by company, of course.  Ask your employer.
  3. Third, you must be totally and permanently disabled.  This means you have a disability that prevents you from holding a job.  Plus, you must be retired or not working because of this disability.
  4. Fourth, your company must be paying disability income to you.  To get the disability tax credit, your payments must be coming from your employer’s health plan or pension plan or accident plan.
  5. You cannot have an income more than $17,500 if you are single.
  6. If you are receiving benefits that are not taxed, they cannot total more than $5000 for that tax year.  This figure is different depending on your filing status (single, married filing jointly, married filing separately).

How To Claim the Disability Tax Credit

Just use tax prep software is always the best answer!  But if you’re doing paper forms or want to check on what your tax prep guy is doing, it’s Schedule R.