Calling All Tax Procrastinators: Don't Forget Fido, Tuition, Hearing Aids, SSI/SSDI
Posted by: Staff Writer on April 8, 2013
We're getting down to the wire: Unless you're an early-bird filer or are taking the Form 4868 (a tax extension) route, you've only got a week left to file taxes for the year 2012.
Still haven't bitten the bullet and dug through your shoeboxes of receipts and piles of W-2s? You're not alone. But good ol' human nature (like procrastination) isn't the only barrier that Deaf tax filers face, say our friendly tax pros at DeafTax.com. As the subsidiary of Schwarz Financial Services, LLC, the company has been providing tax preparation and planning services for the U.S. deaf community since 1971.
The tax code has changed since then, but one thing remains true: It's as confusing as ever. That's the case whether you are hearing or deaf:
"We find that many Deaf people simply are not informed regarding taxation issues," said Joshua Beal, founder and tax preparer at DeafTax.com. "This may be due to low literacy rates and inability to decipher 'financial' language that is used to explain rules and regulations relating to taxes."
But have no fear. Even with only a week left, here's a checklist:
Get the lowdown on how SSI, SSDI affects your taxes.
The tax circumstances of Americans with disabilities are so unique, that Washington Access Fund recently hosted "Taking Advantage of Tax Incentives and Deductions" a webinar to teach them and their families how to reduce their tax bite. Gene Ross, a senior tax consultant with the Stakeholder Partnerships, Education and Communication division of the Internal Revenue Service (IRS-SPEC), led the presentation.
Because quite a few deaf/hh Americans claim SSI and SSDI to pay the bills while searching for new employment, the topic of disability benefits is a frequently asked question. Want to know if you qualify for the Earned Income Credit (Publication 596)? Remember, SSI and SSDI don't count.
"The earned income credit is based on earned income," clarified Ross. "For instance, if the only income you have was Social Security or SSI income, you would not receive that particular credit."
"Many people call and ask if they need to file their taxes if they only have SSI or SSDI," said Beal. "Filers only need to report income if there is other taxable income reported on a W-2, 1099 form, and so forth."
From that point, the SSDI becomes taxable after the first $32,000 of taxable income.
Got a disability, but not claiming a disability for Social Security? You can still claim impairment-related work expenses (IRWE).
This is a frequently asked question, Ross said, and framed as such: "I have a disability, but I am not claiming it, because I feel that I can work around it at this point in my life. I can continue to work. I am not limited in what kind of income I can make because of the disability."
For example, perhaps your buy hearing aids to function in your all-hearing company and insurance doesn't pay a dime of it nor do you get SSI/SSDI. You can deduct IRWEs on Schedule C, C-EZ (Profit or Loss from Business) or Schedule F (Profit or Loss from Farming) if you are a self-employed individual.
Complete Form 2106 (Employee Business Expenses) or Form 2106-EZ (Unreimbursed Employee Business Expenses) if you are a disabled employee. Your IRWEs are not subject to the 2 percent adjusted gross income limit that applies to other employee business expenses.
"You do not have to be on Social Security to be claiming those expenses," continued Ross. Because he has a visual impairment, he uses the example of a blind person utilizing a reader for work: "You must sit down and look at the expense, look at the publication, and see if you are meeting this requirement … and ask: 'Am I incurring this expense in order to allow me to do this job?'
Self-employed and working from home? Deploy Publication 587 and Schedule C, Schedule C-EZ.
Self-employment is a popular choice for enterprising deaf/hard of hearing individuals. Combine a lack of office politics, communication barriers, and a self-directed nature, and it makes sense that nearly 15 percent of working disabled people are self-employed compared to under 10 percent of non-disabled working people.
Also, if you own a business that employs other deaf workers and workers with disabilities, don't forget the Work Opportunity Credit (Form 5884) or the Disabled Access Credit (Publication 535) which is a non-transferrable, non-refundable credit of up to $5,000 a year.
"Most companies are not aware of (the Disabled Access Credit) until a need for accessibility arises whether through a client or complaints from disabled individuals," said Beal.
Getting your "learn" on in school? Publication 970 is your best friend.
No doubt, education is key to advancing in a hearing world. Not only does it help you vie for promotions and bonuses, high-demand fields attract employers who are less likely to see your deafness as a deterrent.
But there's no doubt that it's expensive. That's where IRS Publication 970 comes in, and it includes the American Opportunity Credit, Lifetime Learning Credit, student loan interest deductions, Coverdell Education Savings Account (ESA), and Qualified Tuition Program (QTP).
"Educational expenses are pretty complicated, but they can be very beneficial," said Ross. "Yes, they can benefit you on your taxes, but there are a whole myriad of possibilities as to where you can take those expenses."
That includes covering a dependent's tuition, or an employee who is attending school to boost a skill set.
Got hearing aids, speech therapy, or other medical bills? Get a deduction via Publication 507.
There's no question that health expenses can keep us up late at night. As if we didn't already need to worry about co-pays for blood tests and the baby's vaccinations, one constant in our life is paying for pricey hearing aids that U.S. insurance doesn't cover.
"The key for medical expenses is to save anything you think might qualify and then sort through it at the end of the year," said Ross.
That includes all the receipts for ear molds, hearing aid repairs, and so forth. Oh, and don't forget to save receipts for your furry assistant (see below):
Is Fido your hearing service dog? Write the pooch off (as a medical expense).
"Another issue I've seen is taxpayers asking of their 'hearing' dog is eligible for tax deductions and the answer for that is "Yes," said Beal.
Not just for the blind, this special breed of man's best friend is also trained to alert deaf people to household sounds that are necessary for everyday safety and independence. It's not just the Kibbles n Bits that add up: It can cost over $20,000 to bring a service or guide dog from birth through training.
"You can include the cost of buying, training, and maintaining a service animal. They can be included as medical expenses (on Publication 502)," said Ross.
Vroom, vroom! Guess what you write your adaptive vehicle off as?
Special cars aren't just for Batman and Robin ... and tax incentives don't just go to Prius and Volt owners. Did you know that you can write your adaptive vehicle off as a medical expense, too?
Not necessarily entire vehicles, but add-on adaptive devices that make our life easier – and safer – behind the wheel. For instance, enhanced turn signal reminders blink and sound an increasingly louder tone until the turn signal is switched off. A siren detector flashes red lights whenever its microphone detects an approaching emergency vehicle siren.
"The cost of the vehicle itself is not medical expense, but the difference between the regular cost of vehicle and the cost for an adapted vehicle can be taken as a medical expense," said Ross. "That would include the cost of special adaptive equipment that is required to make the vehicle accessible."
When in doubt, contact deaf-friendly tax professionals.
"A large part of our business is not just preparing returns for our Deaf clients, but educating clients about the taxable activities and consequences pertaining to them," said Beal. "Many of they want to know why and how they arrived to their tax status."
Fluency in ASL and Deaf Culture (you can request a consultation via videophone, relay, or email) isn't the only way that DeafTax.com differentiates itself from national tax prep firms. They don't charge specific fees for different forms, schedules, or types of processing.
"Instead, we charge an hourly fee that is very reasonable compared to other providers, including CPAs and other tax preparers," said Beal. "Since we spent several years working with the IRS and National Disability Institute to provide low-income tax preparation services, we have instituted a $75 fee for low-income preparation services for the Deaf community."
Whether you hit your local tax preparation service such as HR Block, purchase tax preparation software such as TurboTax or contact signing tax professional such as DeafTax.com, be sure you get your forms out by this Monday, April 15!
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