Tax Credits for People With Disabilities Who Receive SSDI or SSI Benefits

If you're disabled and receive Social Security disability benefits—either SSDI or SSI—you can qualify for certain tax credits. These credits will reduce the taxes you owe on the taxable income you receive, and might entitle you to a refund.

Tax credits for those with disabilities include the:

• child and dependent care credit
• credit for the elderly and the disabled, and
• earned income tax credit.

Unlike a tax deduction, which only reduces your taxable income, a tax credit reduces the amount of tax you have to pay. For example, a $1,000 credit reduces the tax you owe by $1,000. Moreover, you can collect the earned income tax credit even if you owe no tax. You must file a tax return to claim these credits.

These credits are in addition to several deductions, income exclusions, and tax-advantaged accounts for people with disabilities.

Tax Credit for Dependent Care for a Disabled Spouse, Child, or Parent

This credit is also called the disabled dependent tax credit. You might qualify for the child and dependent care credit in one of these three situations:

• You're married and your spouse spends money on your care so that he or she can work.
• You pay for a caregiver for a teenage or adult child who is mentally or physically incapable of self-care so that you can work.
• If your parent is your financial dependent, you pay for a caregiver for your elderly parent so that you can work.

To qualify for this credit, you must pay caregiver expenses for an individual who:

• is physically or mentally unable to care for himself or herself, and
• lived with the person claiming the credit for more than half the year.

What Expenses Qualify for the Disabled Dependent Tax Credit?

Qualifying caregiver expenses that are eligible for this credit are those paid to allow a spouse of a disabled person, a parent of a teenage or adult child with disabilities, or an adult child with elderly parents to work or look for work—for example, a caregiver comes in during the day to look after you so your spouse can work during the day.

Qualifying expenses don't include amounts paid for food, lodging, clothing, education, or entertainment for the person needing care. But expenses for household services like housekeeping qualify if they are at least partly for the well-being and protection of the disabled person.

You can't get a credit for caregiver expenses paid to:

• the spouse of a disabled person
• the parent of a disabled child (unless the child is 13 or older)
• a child under the age of 19, or
• a dependent on the tax return of the person claiming the credit.

How Much Is the Disabled Dependent Tax Credit Worth?

The credit is worth 20%-35% of the caregiver expenses, depending on your income.

The maximum credit is equal to 35% of up to $3,000 in qualifying caregiver expenses, per child. This makes the maximum credit worth $1,050. The minimum credit is 20% of caregiver expenses (or $600 on the maximum of $3,000 of expenses).

You can receive this credit regardless of how much income you receive. But the amount of the credit is reduced for higher-income taxpayers. (In other words, the percentage of the expenses for which you get a credit is dependent on your income.)

This credit is not refundable. This means you get it only if you (and your spouse, if you're married) owe income tax to the IRS. You can calculate the credit on IRS Form 2441. For more information, see IRS Publication 503, Child and Dependent Care Expenses.

Tax Credit for the Elderly or the Disabled

This disability tax credit helps people under 65 who retired from work on permanent and total disability and are receiving taxable disability income from their former employer's accident plan, health plan, or pension plan. (The credit can also provide relief to nondisabled people over 65, but this article addresses only the credit for the disabled.)

To qualify for the tax credit for the disabled, a doctor must certify that you're unable to perform significant employee job duties or be self-employed because of your physical or mental condition.

Unfortunately, most people with disabilities don't qualify for the credit because they have too much income. You won't qualify for the disability tax credit for 2023 if your adjusted gross income (AGI) or SSI or SSDI benefits are more than shown in the following chart:

Filing Status	AGI is equal to or more than:	SSI, SSDI, other nontaxable pensions equal to or more than:
Single	$17,500	$5,000
Married filing jointly, both spouses qualify	$25,000	$7,500
Married filing jointly, one spouse qualifies	$20,000	$5,000

Here are some examples:

• You are single and you receive disability benefits of $417 or more per month ($5,000 or more per year). You won't qualify for the credit.
• You receive only $300 in SSDI per month, but you have $18,000 in an annual taxable disability pension. You won't qualify for the credit.

If you do qualify for the credit for the disabled, the amount ranges from $3,750 to $7,500, depending on your filing status and income. You must complete IRS Schedule R to figure the amount of the credit. This credit is nonrefundable. This means you get it only if you owe income tax to the IRS. For example, if you qualify for a $3,750 credit and owe $4,000 in income tax, you'll have to pay only $250 in tax. But if you owe no income tax, you get no credit.

Earned Income Tax Credit

If you're disabled and you or your spouse work, you can qualify for the Earned Income Tax Credit (EITC). This credit is available to all low-income workers, not just the disabled. To qualify for the EITC, you must:

• be between 25 and 65 years old
• not be someone else's dependent or child for EITC purposes
• live in the United States for at least half the year, and
• have earned income from working for someone or from running or owning a business—SSI and SSDI payments do not count.

As with the credit for the elderly and disabled, there are income limits for receiving the EITC, but they are not as strict. And the income limit is higher if you have one or more "qualifying children." (To be a qualifying child, your child must be under age 19 or a full-time student under age 24 at the end of the tax year or permanently and totally disabled at any time during the year, regardless of age.)

For the 2023 tax year, you qualify for the EITC if your annual earned income for 2023 is less than:

• $17,640 ($24,210 married filing jointly) with no qualifying children
• $56,838 ($63,698 married filing jointly) with three or more qualifying children.

The IRS has an EITC Assistant tool on its website that you can use to see if you qualify for the credit. If you do qualify, for the 2023 tax year, the maximum amount of the credit ranges from $600 for no qualifying children to $7,430 with three or more qualifying children.

The EITC is refundable, which means you get the full credit even if the amount exceeds the income tax you owe—or even if you owe no income tax at all.

To obtain the EITC, you must file an income tax return and attach Schedule EIC if you have one or more qualifying children.

Tax Refunds for SSDI and SSI Recipients

Receiving SSDI or SSI benefits doesn't prevent you from receiving a tax refund.

You can get a tax refund even if you're on SSI and don't pay taxes, if you qualify for certain types of credits like the child tax credit or earned income tax credit. (Only a portion of the child tax credit is refundable, meaning that you could receive the credit even if you have zero income tax liability. So SSI recipients who don't owe taxes can get most of the child tax credit, but not all of it, as a refund.)

Whether you owe taxes or not, you should file a tax return if you think you qualify for any of the above credits discussed above. If you don't file a tax return, you will miss out on many of the credits. If you qualify, you'll get the credits in the form of a tax refund after you file your tax return.

_{Updated January 3, 2024}

_{Go back to the previous article to learn about tax breaks for people with disabilities.}