Disability Tax Points
Disability payments made by certain payer are tax free income. Included are:
Department of Veterans Affairs Payments
Workers Compensation payments related to physical injury or illness
Damages awarded for physical injury or illness
Compensation payments for permanent loss of some bodily function
Note: Social Security disability payments are taxed just like regular Social Security payments, based on the income level of the recipients.
Home Improvements for Disabled Taxpayers
The cost of home improvements that make life easier for a disabled taxpayer is deductible as a medical expense. This is subject to the 10% limitation and to the extent that the cost does not exceed the increase in value that the improvements may add to the home.
Limitation example: You add an special air conditioning and filtering system to your home at the cost of $25,000. However by doing so it increases the value of your home by $15,000. You can deduct the $10,000. as a medical expense.
Tuition and Special Schools
You can deduct as medical expense the cost of tuition and special schools designed to relieve phyical disabilities.
Example: Schools that teach sign language, lip reading or Braille. A disabled person can deduct the cost of lodging and meals when they travel to get the training.
