It’s time once again to start thinking about tax season. The April deadline is already stressful enough for people who take the standard deduction. But if you’re a wheelchair user or you have limited mobility and you want to itemize your expenses, then you’re facing a whole new kind of tax complication.
The good news is that there are plenty of deductions available to you, and they cover more expenses than you think. However, there is some bad news: tax law changes that went into effect in 2018 make the choice between the standard deduction and itemization more complicated.
Thankfully, you don’t need to get through tax season alone. Here are some tips to help you roll through tax season with ease, and hopefully come out the other side with more money in your pocket.
Itemization: What You Need to Know First Before diving into all the tax breaks available to you, it’s important to reiterate the changes to the tax law that directly impact people living with disabilities.
Thanks to the American Tax Cuts and Jobs Act of 2017, you have to make sure you itemize your deductions. However, more and more people find it’s difficult to decide whether to itemize or whether to take the standard deduction, which doubled. If you have children, then the decision is often easier: itemization is the way forward as long as you qualify for the tax credit.
At the same time, some of the deductions increased. For example, if your qualifying medical expenses were over 7.5% of your adjusted gross income (AGI), then you can deduct them. That’s good news if you previously found that you fell under the old 10% AGI threshold.
Are You Claiming All Your Deductions? As noted earlier, the medical expenses deduction applies to all expenses that total over 7.5% of your AGI. If you’re someone who has a significant amount of medical bills, it means you claim both your preventive treatment and non-routine care from major surgeries down to more simple dental procedures like root canals.
You’re not just limited to itemized bills from your healthcare provider. If you’re a person adapting to life with limited mobility, then you can also claim items like:
- Wheelchair van
- Wheelchair lift
- Service animals
- Chiropractor expenses
- Insurance premiums
- Hospital services
It’s important to remember that not all items will immediately stand out as an obvious deduction. For example, if your service animal requires surgery during the year or undergoes a serious medical event, then you can write off the costs of their surgery and recovery. It applies to any animal that falls under the Americans with Disabilities Act (ADA) definition, which includes brace and mobility support dogs (BMSDs).
Choose an Accountant Who Works with Clients with Disabilities Accountants are number crunchers best known for their ability to come up with legitimate deductions seemingly out of thin air. If you are writing off a long list of items related to your mobility issue, then you may do well to work with an accountant who has other clients with different types of disabilities.
Not only will an accountant with a diverse range of clients be better able to identify potential deductions, but they are a huge benefit if you are someone who left and now wants to return to the workforce, particularly if you want to do so in a capacity where you’re self-employed. The rules and codes are extremely complicated, and it’s helpful to have someone who can help you navigate both the income rules and the tax issues surrounding income and disability.
These accountants can also help you deal with outstanding student loan debt, which often becomes unmanageable in the face of a recent disability or loss of income.
Make Sure You Use Free File (If Eligible) If you fall under the umbrella of low-to-middle income earners, then there’s a good chance that you can file for free regardless of whether you itemize or not. It’s part of a government program called the IRS Free File program and is available to anyone who earns an adjusted gross income of $69,000 or below. The program isn’t new: it’s been around since 2003, but neither the IRS or accountancy firms promote it, which means only 2% of the eligible 70% of taxpayers end up using it. (Plus, an investigation by ProPublica found that companies hide their Free File programs on purpose in favor of paid products, despite being listed as a participant.)
If you don’t qualify for Free File, or you still find it too complicated (it’s unfortunately complex), then you may qualify for other programs. If you’re a senior with mobility issues, check with the American Association of Retired Persons (AARP) Foundation, which runs programs aimed at taxpayers 60 years and older. If you’re veteran, then use Military OneSource, which is funded by the Department of Defense. Military OneSource is particularly helpful for active-duty military and veterans who have complicated tax issues, including disability payments, deployment, multistate filings, and combat pay. Plus, you’ll get a real tax consultant rather than a redirect to tax prep software.
Finally, if the above options aren’t available and you haven’t yet found a good accountant, don’t feel restricted to the professionals in your geographic area. Seek out accountants with experience in other states (at least for your federal filing). Technologies like cloud computing advancements have freed up accountants to act more like consultants, and they allow you both remote access to your files.
Image credit: Photo by Helloquence on Unsplash