Know Your Tax Deduction Options
Preparation of 2006 tax returns is well underway. People with disabilities have a number of different tax deductions available to them, according to Kate McKnight, senior tax specialist for the Internal Revenue Service (IRS). Following are some of the most common deductions and how to find more information.
The Lifecycle series pamphlet (3966), which provides some of the information here, is available on the IRS website at www.irs.gov. The Lifecycle pamphlet lists some of the most common deductions and the form numbers needed for filing.
One of the most common deductions for people with disabilities is earned income tax credits (EIC). “A lot of people may live in a group home and work in sheltered workshops. If they work, even if they don’t have a filing requirement, they may be eligible for the EIC,” said McKnight. “If a person makes $3,000 a year and files for the credit, he or she will receive $231. For an income of $6,700 per year, the EIC would be $412.” Furthermore, if a resident of Indiana qualifies for the federal EIC, they automatically qualify for the state EIC, which is 6 percent of the federal credit.
Since there are always new forms and new deductions offered each year, it’s important to see what has changed from 2005. According to McKnight, there aren’t many changes to the tax code that exclusively benefit people with disabilities. However, one benefit to a number of households is a new federal excise tax refund for those who had long distance telephone service between Feb. 28, 2003 and Aug. 1, 2006. The amount refunded will be based on the number of exemptions on the return. For example, families of four or more people will receive a $60 refund. If there is one person, there will be a $30 refund. Instructions can be found on your tax form.
For people facing issues with various tax codes, the IRS offers the taxpayer advocate service, which will work with individuals to address concerns. “These are the people that let the U.S. Congress know what the issues are in the tax codes, so it is important to let them know what problems people are facing,” McKnight said. This service can be reached at (877) 777-4778 (voice) or (800) 829-4059 (TTY/TTD). For more information, please see Publication 1546 at www.irs.gov.
===========================
The following IRS publications may help in filing your tax returns:
· Pub 907, Tax Highlights for Persons with Disabilities
· Pub 501, Exemptions, Standard Deductions and Filing Information
· Pub 535, Business Expenses
· Pub 525, Taxable and Nontaxable Income
· Pub529, Miscellaneous Deductions
· Pub 524, Credit for the Elderly or Disabled
· Pub 502, Medical and Dental Expenses (including Health Coverage Tax Credit)
· Pub 596, Earned Income Tax Credit
· Pub 503, Child and Dependent Care Expenses
· Form 8826, Disabled Access Credit
· Form 3800 General Business Credit
· Form5884, Work Opportunity Credit
· Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity and Welfare-to-Work Credits
These publications are available for free by calling (800) 829-3676 (voice) or (800) 829-4059 (TTY/TTD), or via the IRS website at www.irs.gov.
(Courtesy of the Indiana Governor’s Council for People with Disabilities)