There are different rules for what’s considered a disability for taxes depending on the specific tax benefit.
What is a disability for tax purposes?
People with disabilities may be able to receive increased standard deductions, special tax credits, property tax breaks, and other tax benefits.
For tax purposes, a disability generally means something that prevents you from working or reduces your ability to work. Some, but not all, tax breaks require you to be permanently disabled.
There are often separate tax rules for those who are blind.
How do you prove a disability for taxes?
There are several possible ways to prove a disability for taxes.
For state income taxes and property taxes, many states require you to be receiving disability benefits from Social Security or the VA. This makes it easier for
For federal tax credits for the disabled, the IRS usually requires your physician to sign a certification form. Your doctor will need to certify that your condition prevents you from engaging in substantial gainful activity and that it has or can be expected to last for 12 months or more.
Who is considered a disabled dependent?
A disabled dependent is a person who meets the usual requirements to be considered disabled for tax purposes. To be considered your dependent, you generally need to provide for more than half of the dependent’s support.
What is a permanent and total disability?
A total disability is one that prevents you from engaging in any substantial gainful activity.
Permanent sometimes means literally permanent or with no reasonable expectation of change. The IRS sometimes defines permanent as a condition that’s expected to last 12 months or more.
Is arthritis considered a disability for taxes?
Arthritis can qualify for disability depending on the severity. Your doctor would need to certify that it prevents you from working.
Is anxiety considered a disability for taxes?
Anxiety can be considered a disability for taxes. This can include OCD, panic disorders, PTSD, and phobias.
To qualify, your doctor would need to certify that your condition prevents you from working on a long-term or permanent basis.
What is substantial gainful activity?
Unlike disability pensions for certain types of jobs, being disabled for taxes usually means that you can’t do ANY job not just that you can no longer perform your previous job.
Having hobbies, doing chores, enrolling in school, or taking part in other social activities does not necessarily mean that you can engage in substantial gainful activity. However, the IRS or doctors may consider your daily activities when determining the limits of your abilities.
There are exceptions for what’s considered sheltered employment. Sheltered employment is a certified jobs program designed for people with physical or mental disabilities.
If you accept sheltered employment, you may still qualify as disabled for taxes.
What about tax credits for the elderly?
Some tax benefits at the state and federal level are for both the elderly and disabled. This means that to qualify, you either need to have a qualifying disability or be over a certain age.
Many of these tax credits don’t double up if you’re both elderly and disabled. You only get one tax credit. In those cases, once you meet the age requirement, you no longer need to provide proof of a disability.
However, there are some tax benefits that are only for the elderly or only for the disabled. Be sure to check for both sets of benefits.
Do I have to file taxes if I only have disability income?
There are certain situations where your benefits may become taxable. You may also be eligible for refundable tax credits.
It’s a good idea to check whether you should file a tax return each year. The IRS Free File program allows you to file a tax return for free. You may also be able to get in-person assistance from the IRS Volunteer Income Tax Assistance program.
You may want to review these IRS guides:
- More Information for People with Disabilities
- Credit for the Elderly or the Disabled
- Disability and the Earned Income Tax Credit