Key Terms

Taxpayers with Disabilities

What deductions or credits may apply to taxpayers with a disability or their caretakers?

Medical Expense Deduction

Taxpayers can deduct medical and dental expenses for themselves, their spouse and dependents.

What does the IRS consider a medical expense?
Medical expenses include:

  • Payments for a diagnosis, a cure, mitigating treatments, prevention of a disease or for other medical treatments.
  • Additionally, this deduction includes cost of transportation for needed medical care and payments for medical insurance.

Are there limitations on medical expense deductions?
Yes, this deduction can only be claimed if:

  • The taxpayer itemizes deductions; and
  • For tax years 2012 and prior, the taxpayer’s expenses exceed 7.5 percent of their adjusted gross income. Beginning with tax year 2013, the taxpayer's expenses must exceed 10 percent of their adjusted gross income.

How can I claim this deduction?
The Medical Expense Deduction is reported on Form 1040 (Schedule A), Itemized Deductions.

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Impairment-Related Work Expense Deduction

Taxpayers with a mental or physical disability can claim the Impairment-Related Work Expense deduction. This physical or mental disability must limit employment or substantially limit one or more major life activities.

What is considered an impairment-related work expense?
This includes business expenses for attendant care at the taxpayer’s place of work and other expenses at the taxpayer’s workplace that are necessary for him or her to work.

Are there limitations on this deduction?
Yes, in order to take this deduction the taxpayer must itemize deductions. However, this deduction is not subject to the 2 percent adjusted gross income threshold for work-related expenses.

How can I claim this deduction?
If you are self-employed, the business expenses should be deducted on the appropriate form (Schedule C, C-EZ, E, or F), which is used to report your business income and expenses. Employees complete Form 2106, Employee Business Expenses, or Form 2106-EZ, Unreimbursed Employee Business Expenses.

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Tax Credits for the Elderly or Disabled

A taxpayer can claim this tax credit if he or she is age 65 or older, or is permanently unable to work and receives disability compensation.

Are there limitations on this credit?
Yes, the credit is reduced by some non-taxable Social Security Benefits, other non-taxable benefits and some of the taxpayer’s adjusted gross income. The creditable amount varies depending on the taxpayer’s circumstances, such as marital status and if one or both spouses qualify for the credit.

How can I claim this credit?
The credit can be claimed on Form 1040 or Form 1040A using Schedule R, Credit for the Elderly or the Disabled to claim the credit.

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