Can a Person on Disability Be Claimed as a Dependent?
Taxes may not immediately come to mind as the topic for a blog about Social Security disability benefits. If you have a child or a relative with a disability, you may be able to claim them as a dependent.
You may be entitled to a disability dependent claim on behalf of a disabled child or family member on your income tax return. Start by getting to know the Internal Revenue Service rules for claiming a qualifying child or qualifying relative as a dependent by reading this blog. The next step is getting professional advice.
American Disability Action Group has experience assisting people nationwide with their disability benefits claims. Contact them when you have questions about disability benefits and how they could affect your taxes.
IRS Rules For Dependents
The IRS has rules, lots of them, but the ones that apply here have to do with dependents in general. Before you can claim a deduction or a tax credit on your federal income tax return, the child or relative must meet the following general rules for dependents:
- Dependents must be U.S. citizens, resident aliens or nationals, or residents of Mexico or Canada.
- A dependent may be claim on only one tax return.
- Dependents may not file their own tax return claiming a dependent.
- Spouses filing a joint tax return may not claim one spouse as a dependent.
- A dependent must be either a qualifying relative or a qualifying child.
A dependent child who meets the general rules also must meet the following IRS tests for someone to claim and receive tax benefits for disabled qualifying child:
- The child must be a son, daughter, stepchild, foster child, brother, sister, half-brother, half-sister, half-brother, step-brother, step-sister, or adopted child of one of these relationships.
- The dependent child must be younger than age 19 or younger than 24 when a full-time student. There is no age requirement for a child who is permanently and totally disabled.
- The child must reside with the person claiming them as a dependent for more than half the year.
- The person filing the return must provide more than half the financial support for the dependent child.
The following tests must be met for a disabled family member to be claimed as a qualifying relative dependent, in addition to the general rules for dependents:
- The relative cannot be your qualifying child or the qualifying child of another taxpayer.
- The relative must be a member of the taxpayer’s household for the entire tax year.
- The relative’s gross income cannot exceed $5,050.
- The relative must receive more than half of their support from the taxpayer.
The ability to claim a disabled child or relative as a dependent could provide tax breaks, including the Earned Income Tax Credit and the Child Tax Credit.
The Earned Income Tax Credit applies to disabled adult children and other disabled dependents. It is a refundable tax credit, which means that it not only reduces your income taxes, but you could receive a refund when the credit exceeds the taxes that you owe.
The Child Tax Credit grants you a tax break when you claim a qualify child as a dependent. It is a non-refundable credit that reduces your tax liability for the year. You claim the credit on your federal income tax return. Some taxpayers may be entitled to claim an Additional Child Tax Credit, which lets some taxpayers receive a refund of the Child Tax Credit when their credit exceeds the amount of their tax liability.
Social Security Dependent Rules
The child of a parent who receives Social Security Disability Insurance (SSDI) benefits may be entitled to benefits. The SSA dependent rules provide family benefits to the spouse, children, and other members of an SSDI recipient.
Children must be unmarried and younger than 18 years of age. The age requirement increases to 18 to 19 for a child who is a full-time student in primary or secondary school full time.
Special disabled family member rules apply to the child who is 18 or older of a person entitled to Social Security disability benefits. The child may be entitled to adult child benefits provided they have a disability that began before age 22, and they must be unmarried.
Adult child benefits may be up to 50% of the SSDI benefit amount received by their parent. However, adult child benefits increase to up to 75% when the parent is deceased. These amounts also apply to children and other family members who receive dependent benefits.
Contact The Disability Team At ADA Group
Tax laws can be complex, and compliance may depend on a person’s specific circumstances. Consult a tax professional to ensure compliance with IRS rules. The disability team at American Disability Action Group can provide advice and guidance on SSDI dependent rules and other questions you have about Social Security disability benefits. Contact ADA Group today for a free consultation.
Source:
https://www.irs.gov/credits-deductions/individuals/dependents