Income and Tax Help

Families of children with disabilities may be eligible for financial assistance through programs that can supplement their income or help to avoid paying taxes on disability-related expenses. This extra money can help families save money over time and help to fund purchases for their child and the rest of the family.

Many families of children with disabilities may be eligible for Supplemental Security Income (SSI), a federally-run income supplement program funded by general tax revenues. This program works to assist disabled adults and children who have limited income and financial resources. Unlike public insurance programs, SSI funding comes in the form of cash and can be used to pay for food, clothing, shelter, and other basic needs. SSI is distributed monthly, and like its name suggests, works alongside traditional income to help ensure that families of children with disabilities can support their needs. Much like Medicare and Medicaid, the SSI program has a set of eligibility requirements needed for access to SSI benefits. In order to be eligible for SSI a person must:

• Be over the age of 65;
• Be blind; or
• Be disabled.

AND

• Have limited income or resources
• Be a U.S. citizen (or fit other residency requirements).

For more specific information about the eligibility requirements for SSI it may be helpful to visit the SSI eligibility requirements page or use this benefits eligibility screening tool.

Federal income tax credits and deductions may reduce the amount of taxes that a family is required to pay each year. Parents of a child with a disability may be eligible for certain tax benefits, each with its own value and eligibility criteria. Families of children with disabilities may find it worthwhile to consider the eligibility requirements for certain tax credits and deductions, as it may save them a substantial amount of money annually.

Tax credits lower the dollar amount of income tax a family owes, to account for certain expenses. Some tax credits that parents of children with disabilities may be eligible for are:

• Health Coverage Tax Credit: this credit pays 72.5% of qualified health insurance premiums for eligible individuals and their families.
• Earned Income Tax Credit: This credit reduces the amount of tax owed and may provide a refund to low-income families.
• Child Tax Credit: This credit applies up to $1,000 per qualifying child, and may also provide a refund under certain circumstances.
• Dependent Care Tax Credit: This credit is for the cost of care for a qualifying individual to allow parents to work, or search for employment.
• Tax Credit for the Elderly or Disabled: This is a credit for elderly or disabled individuals that ranges between $3,750 and $7,500, annually.

Tax deductions lower the dollar amount of taxable income a family has. A family’s income is taxed annually. Families with greater income pay a higher dollar amount of income taxes than families with lower income. An income tax deduction essentially lowers a family’s income amount to adjust for certain expenses, thereby lowering the amount a family is taxed on their income. Often, families of children with disabilities may be eligible for medical expense deductions, which deducts the amount by which a family’s total qualified medical expenses exceed a certain percentage of their adjusted gross income. Qualified medical expenses that may be particularly pertinent to families of children with disabilities are:

• General expenses for maintaining and improving your child’s health
• Expenses for home-accessibility modifications
• Expenses for hospital travel (gas money, parking)
• Expenses for medically-related lodging (hotel expenses)

For more information about federal income tax credits and deductions for disability, visit the IRS website and/or speak to your financial advisor.

• Possibilities: A Financial Resource for Parents of Children with Disabilities
• Social Security Administration