2008 IRS Tax Laws for Claiming Social Security Benefits
The Internal Revenue Service (IRS) implemented new tax laws for Social Security recipients in 2008. First, a new tax credit was given to elderly and disabled Social Security recipients who meet the tax law requirements of elderly or disabled. Second, a new dependent care exemption provides a deduction for taxpayers who pay a facility or provider to care for the taxpayer's disabled dependent.
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Disabled or Elderly Taxpayer Credit
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Generally, the IRS taxes Social Security benefits if the disabled or elderly taxpayer's total benefits exceed $25,000. However, the new tax laws provide tax-free Social Security benefits for individuals who exceed this annual limit. The IRS provides the tax credit only to disabled or elderly taxpayers. If the taxpayer qualifies for the credit, then the credit amount is reported on Schedule R.
Definition of Elderly or Disabled
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Only elderly taxpayers ages 65 and older, and disabled retirees who are younger than 65 may qualify for the credit. Individuals are considered permanently and totally disabled if they are not able to perform substantial gainful work due to the physical or mental impairment. Individuals younger than 65 must obtain a physician's certification that the disability will continue for at least 12 months or will eventually lead to death.
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Minimum Threshold Amount
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To qualify for the credit, the taxpayer's disability income must exceed $25,000 for single taxpayers or $32,000 for taxpayers who are married filing jointly. The IRS provides special "shelter" considerations for disabled taxpayers who work in sheltered institutions, workshops or programs sponsored through the Department of Veterans Affairs. The nominal pay received from these sheltered organizations may not count toward income and will probably provide an exception to the gainful working requirement.
Disabled Dependent Care Benefits
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The IRS provides a dependent care benefits tax deduction for taxpayers with disabled dependents. The disabled individual must be unable to take care of himself due to the debilitating mental or physical disability. The provider's fees for the care is the deductible amount. The disabled individual must be the taxpayer's spouse, relative or other dependent that is claimed as a qualified dependent on the taxpayer's 1040 returns. The dependent care is provided in a long-term facility or at home through a qualified care provider.
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References
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