Living with a disability involves making adjustments to your environment. From specialized mobility equipment to additional medical care, day-to-day living with a disability can get expensive. The IRS recognizes this and allows you to deduct from your income taxes some of the extra costs associated with being disabled. To take advantage of any of these deductions, you must itemize as medical expenses on Schedule A.
If you modify your home to widen doorways, install a wheelchair ramp, add a handicap accessible bathroom, install a stair lift, or make other changes to accommodate your disability, you can deduct part of the cost of these improvements from your taxes. The IRS classifies such improvements under medical deductions, so they’re subject to the 7.5 percent limit, meaning you can only deduct the amount by which they exceed 7.5 percent of your adjusted gross income. Even then, you can’t deduct the entire amount, but only the amount in excess of the value the changes add to your home. So, if you install a second bathroom on your home’s ground floor, you can only deduct the cost over and above the additional value the bathroom adds to your home. You might need a professional appraisal to determine how much value, if any, handicap modifications may add to your home.
If you purchase a wheelchair van or pay to equip your car with hand controls, a wheelchair lift or other vehicle mobility product, the cost of installing these modifications can be part of your medical expenses deductions. In other words, the cost of the purchase of the van itself is not deductible. However, any modifications made for medical purposes, such as wheelchair lifts, would be deductible. Likewise, the amount of the deduction is the amount you paid, less the cost of a similar van that is not handicapped equipped. As with home improvement costs, you can only deduct the amounts that are more than 7.5 percent of your adjusted gross income.
If you pay for a service animal or guide dog, a wheelchair or an artificial limb, these are medical expenses related to your disability and you can deduct them as part of your medical expenses. Remember to deduct only those expenses that aren’t covered by insurance, or for which you aren’t otherwise reimbursed. As with all medical expenses deductions, you can only deduct amounts in excess of 7.5 percent of your adjusted gross income.
Expenses that you incur to adapt your workspace for your disability are deductible as employee business expenses. For instance, if you’re blind and you subscribe to Braille versions of law journals, these are deductible. If you purchase a special chair or special computer equipment and your employer doesn’t reimburse you for these expenses, you can deduct them. All of these work-related expenses fall under Miscellaneous Deductions and are subject to the 2 percent rule. You can only deduct amounts that are over 2 percent of your adjusted gross income.
A small business owner can broaden his hiring options and his customer base by making the business friendlier for people with handicaps. A wide range of Improvements, from adding ramps and wide doorways for wheelchair users to providing menus or brochures in Braille for blind customers can be valuable for the business and the community. These improvements can cost quite a bit, however, so owners should take advantage of any available tax credits to help cut down on the costs.
Disabled individuals are not the only ones eligible for tax credits for handicap accessible improvements. Businesses can broaden their hiring options and their customer base by making the business friendlier for people with disabilities. A wide range of improvements, from adding ramps and wide doorways for wheelchair users, to providing menus or brochures in Braille for blind customers, can be valuable for the business and the community. These improvements can cost quite a bit, however, so owners should take advantage of any available tax credits to help cut down on the costs.
Section 44 of the IRS tax code gives a federal tax credit for small businesses that make the business more accessible to handicapped individuals. These changes are made to comply with the Americans with Disabilities Act. To qualify as a small business, the business must have earned no more than $1 million that year or had no more than 30 employees. The maximum tax credit a business can get is $5,000. The credit is for 50 percent of any money spent to make the business more accessible - ranging from sign language interpreters, to Braille-printed materials, and removing barriers that prevent people with disabilities from accessing a building.
Section 190 of the federal IRS tax code allows a tax deduction to any business that pays to remove physical or vehicle-related barriers that would prevent disabled people from accessing a workplace. A business can take a maximum deduction of $15,000 each year. Examples of qualifying expenses include providing wheelchair accessible water fountains and restrooms, making walkways wide enough for people with wheelchairs and providing wheelchair-accessible parking spaces.
Businesses are eligible for a tax credit if they employ people who are disabled. If the person is referred to them by a related state or federal agency, then the business can get a tax credit that covers up to 40 percent of the employee's first $6,000 earned in the first year. The employee must have worked at the business for at least 90 days. The credit does not cover employment after the first year.
Businesses sometimes also use Section 179 of the IRS tax code to get further deductions on accessibility purchases. Although not written specifically for handicapped purchases, the code applies to any tangible property that's purchased for active use in a business. This can include items such as voice-activated computers and Braille readers that are used for disabled employees. Section 179 allows the business to deduct up to the entire cost of the item in the first year that it's purchased, up to $17,500, rather than having to depreciate it over the life of the item. A tax attorney or financial adviser can figure out the exact deduction available.
Additionally, some states offer tax credits in addition to those offered by the federal government for businesses that make changes to improve disabled access. The rules vary from state to state, so consult a tax attorney or financial adviser for the exact rules in your business's state.
There are many categories that may apply to you in the IRS publication that could apply to your tax return. A wheelchair accessible conversion or other mobility modifications can be a huge benefit to you, your family or business without being a detriment to your pocket.