What is Considered Disabled for Tax Purposes?
For tax purposes, the term "disabled" is primarily used in the context of claiming certain tax credits or deductions, such as the Credit for the Elderly or the Disabled, or for qualifying for certain filing statuses or benefits. The IRS defines disability based on specific criteria, which are generally aligned with the Social Security Administration’s (SSA) definition, though there are some differences in application.
IRS Definition of Disability
The IRS considers a person to be disabled if they are unable to engage in any substantial gainful activity due to a physical or mental impairment. This impairment must be expected to result in death or last for at least 12 months. The determination is based on medical evidence and is typically evaluated by the SSA, but for tax purposes, the IRS may accept documentation from a licensed physician or other qualified medical professional.
Key Criteria for Disability
- Physical or Mental Impairment: The disability must be due to a physical or mental condition that significantly limits an individual’s ability to work.
- Duration: The impairment must last for at least 12 months or result in death.
- Substantial Gainful Activity: The individual must be unable to perform any substantial gainful activity, meaning they cannot earn income at a level considered substantial (typically defined by the SSA).
Tax Benefits Related to Disability
Individuals who qualify as disabled may be eligible for certain tax benefits, including:
- Credit for the Elderly or the Disabled: This credit may be available to taxpayers who are age 65 or older or who are disabled, and who meet income and filing requirements.
- Dependent Status: A disabled individual may qualify as a dependent if they meet the IRS’s criteria for a qualifying relative, including living with the taxpayer for more than half the year and having income below a certain threshold.
- Special Filing Rules: In some cases, disabled individuals may qualify for special rules regarding estimated tax payments or extensions.
How to Document Disability for Tax Purposes
To claim disability-related benefits, taxpayers should provide documentation such as:
- Medical certification from a licensed physician.
- SSA disability determination letter (if applicable).
- Other supporting documents that demonstrate the severity and duration of the impairment.
Source:
Publication 501 - Dependents, Standard Deduction, and Filing Information
Publication 524 - Credit for the Elderly or the Disabled
Publication 525 - Taxable and Nontaxable Income
Disclaimer: Always verify information with official Federal or State Department of Revenue Forms and Instructions.