The IRS is encouraging taxpayers with disabilities and parents of children with disabilities to claim the Earned Income Credit (“EIC”) in their tax returns if they qualify. One of the requirements is that the tax payer have earned income. Disability benefits may qualify as earned income if it is a taxable benefit. However, a tax payer’s earned income must be $53,505 or less for the year 2016. Many tax payers with disabilities fail to claim EIC because they do not file a tax return. If they do not file because their income falls below the filing threshold, they should still consider filing to claim the EIC. The EIC is a refundable credit, and taxpayers who file tax returns and qualify and claim the EIC could pay less federal tax, pay no tax or even get a tax refund. Refunds as a result of EIC do not count as income for determining eligibility for government benefits, including social security disability benefits, Medicaid, and food stamps.
Laura M. Trujillo
Disclaimer: This blog is for information purposes only. Legal advice is provided only
through a formal, written attorney/client agreement