5 tax mistakes that’ll cost you the EITC: part 4

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Mistake 4: You didn’t take disability rules into consideration

If you have, or your spouse or a child on your tax return has a disability, it could affect your eligibility for the EITC in a number of ways.

Disability can affect your EITC eligibility

Disability payments

The IRS considers disability retirement benefits as earned income until you reach minimum retirement age.

In contrast, Social Security Disability Insurance, SSI, or military disability pensions are not considered earned income.

So depending on the kind of disability payment you receive, your income might be eligible to be calculated for the EITC.

Claiming a disabled child

Normally, you can only claim a child dependent for the EITC if s/he was younger than 19 (or under 24 if s/he’s a full-time student).

But if you are claiming a child with a disability, there is no age limit as long as the child meets the IRS definition of “permanently and totally disabled”:

  • Not being able to engage in any substantial gainful activity because of a medically determinable physical or mental condition; and
  • A physician must certify the condition has lasted or is expected to last continuously for at least 12 months or to result in death

Real-life example

We had a customer whose daughter was 33, and normally couldn’t be claimed as a dependent for the EITC.

However, her daughter was considered disabled under the IRS definition and the mother was able to claim her adult daughter for the EITC.

If you have questions about how disability can affect your tax return, learn more at the IRS website.


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