Tax Preparation For People With Disabilities

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Tax lawyers are warning taxpayers with severe disabilities and their compilers to be careful with how to report lump Social Security disability benefits for income tax returns this season.

It can take months and sometimes years to get social benefits for disability. So many people get a single, total amount, including reimbursement. One of the most common questions we have received from the applicant this time of year is if SSDI benefits are taxed and about how to report a lump sum on their tax returns.

People who received SSDI lump-sum payments in 2011 will have the amount included in the third form SSA-1099, which is received from the Social Security Administration. This means that users do not need to waste time and money by filing amended returns, or pay more tax on income, for their current year. The actual amount is determined by adding half of SSDI benefits tax on all other sources of income. Many people with disabilities, to claim a credit for earned income tax, are indeed offered a refundable tax credit of up to $ 5751 when the EITC is used.

Approximately 8.6 million disabled people received income from social security programs, including security disability insurance in 2011, including new users. However, it can be very difficult to do manually, and it is recommended that they seek the help of a knowledgeable tax professional, or at least invest in tax preparation programs, which are provided.

People who are blind or visually impaired will be able to adopt the standard deduction. A 2011 federal tax return must be filed if a gross income of more than $ 19,000 for couples filing jointly and $ 9,550 for individuals. The participation of the taxpayer or spouse will require that they were working part of 2011, earned less than $ 13,660 to $ 49,078 (depending on filing status and number of children, state) and had investment income of $ 3,500 or less. Many people with disabilities will not file a tax return because their income is so low.

Taxpayers with disabilities are entitled to a tax credit worth up to $ 7,500, if you receive taxable disability income, accident, ex-employer health and pension plan and meet the income requirements. However, you can lose thousands of dollars from the EITC if you do not file a tax return. As a result, many people who rely on SSDI do not owe any taxes. These individuals and their tax preparers should understand how to report a lump sum SSDI. Up to 50 percent of the social allowance is taxed each year. Taxpayers who pay someone to take care of the dependent or spouse with physical or mental impairments may require dependent care credit up to 35 percent while they are working or seeking work.

The average monthly SSDI benefits in 2011 amounted to $ 1,072.96 and $ 12,875.54 per year. Problems can arise, however, if you mistakenly report all lump-sum payments in 2011, received in 2011 income, in which case they could end up paying too much in taxes. The workers are represented in IRS Publication 915, and are discussed in the free online guide.

Taxpayers can deduct the transfer of their medical expenses if those expenses exceed 7.5 percent of your AGI. Allowable expenses include medical and dental expenses, travel expenses for medical treatment, long-term care and health insurance, as well as the costs of certain types of equipment for people with disabilities. Taxpayers with a chronic illness or a spouse or child with a chronic illness may also see costs decline to participate in conferences related to the disease.

Taxpayers who have a disability or who have relatives or friends with a disability are encouraged to file their taxes with a specialist. At Cohesive Tax, we have specialists ready to help. Take a minute to try our tax estimate site to get a tax estimate and see what we can do for you.

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As seen in Forbes Magazine, Karla Dennis is an expert tax and business strategist. As an enrolled agent, Karla is licensed to represent taxpayers in all 50 states. She holds a Masters in Taxation and Business Development and is the author of two books, Tax Storm and Against the Odds.


Karla, CEO of consultancy firm Karla Dennis And Associates, Inc.™, has saved her clients thousands of dollars and has been featured in various media outlets such as Forbes, MSNBC, KTLA, Yahoo! Finance, and SmartMoney, marking her as the ultimate tax expert.


As of 2014, Karla became the new host on the “Mind Your Business” radio show, KTLK AM 1150, sharing her financial and business knowledge with the greater Orange County and Los Angeles areas. As a supporter of women’s rights and issues, Karla is part of the Women Network, an organization built to educate and mentor women. In addition, Karla is the radio host for Women Network Radio, a show that aims to uplift and empower women of all walks of life.

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