The cost of raising disabled children varies. For instance, raising dependents with various disabilities can cost considerably more whose estimates of the lifetime expenditures for people with autism can reach $2.4 million. Families may find it difficult to afford this expense on top of a large tax bill. Additionally, even though the IRS does not provide a unique tax credit for kids with special needs, certain caregivers may be able to reduce their tax obligations by utilizing some of these tax benefits.
Benefits For Children With Disabilities; Source- CNET
Tax Reduction For Specially Abled Kids
Your taxes may change if you have a kid with a disability. For instance, the Earned Income Tax Credit (EITC) is a tax credit that is refundable which means you may be eligible to get a refund of all or a portion of the credit. The number of qualified children you have affects how much of the credit you receive. For this credit, the IRS considers every kid, no matter of age, who has a total or permanent disability to be children. You must itemize deductions if you want to write off medical costs on your tax return.
However, you might be able to write off more than just the price of your tests and doctor visits. Your home’s adaptations for reliant with disabilities may count as a healthcare expense. As long as you don’t utilize the same costs to claim the kid’s as well as dependent care credit, you may also be allowed to deduct dependent care costs from your medical expenses. You could even be eligible to eliminate the costs of caring for your child’s service animal. Other costs might also be deducted as medical expenses. You can get assistance figuring out which expenses you can write off from a CPA or other certified tax expert.
Benefits For Specially Abled Kids Aged Above 13
Even if your special needs kid is 13 years old or older, you may be eligible to claim the kid’s expenses as well as dependent care credit provided you pay for their care. Usually, only children under the age of 13 are eligible for the credit. However, they might be eligible if the IRS determines that your dependant is “disabled”. Since the credit is not returnable, it can reduce your taxable income to zero but you won’t get any of it back in the form of a tax refund. One qualifying dependent can get up to $1,050 in child and reliant care credits. For a minimum of two qualified dependents, the highest value credit is $2,100.
ABLE Account
State-sponsored savings programs called ABLE (Achieving Better Life Experiences) accounts assist parents and guardians in covering some disability-related costs. Investment profits from an ABLE are tax-free if payments are used to cover eligible expenses, even though investment income is generally taxable. Additionally, you may be able to deduct your donations to eligible ABLE accounts from your taxes in some jurisdictions. Before creating an ABLE account for the kid in your life, there are a few things you should know. Even if funds in an ABLE account are higher than $2,000, your kid may still be eligible for Social Security disability benefits. Before turning 26 years old, the recipient must have had their impairment diagnosed. The annual contribution cap often corresponds to the $17,000 gift tax deduction for 2023.
