Friday, April 10, 2009

It Is That Time Of The Year, Again - Tax Deductions For The Disabled

People with disabilities often have a much greater range of potential expenses to deduct when tax time rolls around. As is the case for other taxpayers, expenses must exceed 7.5 percent of your adjusted gross income (AGI) to be deductible.  For starters, consider these medical expenses:
  • All expenses related to prosthetics
  • Braille books and magazines for the visually impaired 
  • Special equipment installed in the home (includes widening and moving stairways, special ramps for homes)
  • Special hand controls and other adaptive equipment for car if taxpayer has a disability
  • Chiropractor care
  • Contact lenses (including saline solution and enzyme cleaner)
  • Crutches 
  • Dental care
  • Diagnostic services
  • Service dogs and/or other animals (including training and maintenance) 
  • Health institutes (must have a statement from a doctor) 
  • Hearing aids 
  • Inpatient care 
  • Insurance premiums 
  • Lodging and meals at a hospital and/or institution 
  • Long term care 
  • Medical conferences that focus on information about a chronic illness 
  • Nursing homes 
  • Nursing services 
  • Oxygen 
  • Psychiatric care 
  • Psychologist 
  • Special educational expenses 
  • TTY and TDD equipment 
  • Cost of equipment for special televisions 
  • Therapy 
  • Mileage to and from treatment (at a rate of 20 cents/mile) 
  • Transplants 
  • Medical expenses for weight loss 
  • Wigs (purchased on the advice of a physician) 
  • Weight loss expenses related to a directive from your physician to lose weight 
  • Specific treatments for weight-related diseases diagnosed by a physician
In addition to these medical and dental expenses, you may also be able to deduct some home improvement expenses, under the following circumstances:
  • The main purpose of the home improvement must be for medical care
  • The cost of improvement is offset by the increased value of the home
And what about car deductions? The expenses incurred when retrofitting or adapting a vehicle can be substantial, so it is wise to pay attention to the tax impacts here.  Specifically, you may deduct: 
  • The difference between the cost of a regular car and a car designed to hold a wheelchair
  • Special hand controls and other special equipment
So, with all of the expenses that are deductible, what is not deductible?  A general rule of thumb is that if something is a necessary part of your life and the expense is recommended by a physician, it is a deductible expense.  Remember that it is a good idea to always keep and be able to produce all the documentation related to any deductible expense. You may need to provide this documentation during an audit; if you do not have your receipts and other documentation, the expense could be denied, resulting in having to repay the original amount deducted plus penalties and interest to the IRS.

Still unsure of what you can and cannot deduct? Then check out the IRS website at; the publication for medical expenses is Publication 502, found on the website under “Forms and Publications".

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