Publication 907: Tax Highlights for Persons With Disabilities

This IRS publication explains tax rules of special interest to taxpayers with disabilities and their caregivers. It provides information on income tax aspects of disability benefits, deductions, and credits that can help reduce your tax liability.

Who Should Use Publication 907?

  • Persons with Disabilities: Individuals with physical or mental impairments that limit daily activities or employment.
  • Caregivers: Family members or paid professionals who care for people with disabilities.
  • Employers: Business owners interested in understanding tax incentives for improving accessibility for customers and employees with disabilities.
  • Tax Professionals: Advisors looking for the latest information on tax benefits.

Key Points Covered in Publication 907

A. Income

  • Clarifies taxable and non-taxable sources of income for persons with disabilities
  • Explains tax treatment for disability benefits

B. Itemized Deductions:

  • Lists eligible medical expenses
  • Details deductions for impairment-related work expenses

C. Tax Credits:

  • Describes the Earned Income Tax Credit (EITC)
  • Provides information on the Child and Dependent Care Credit
  • Covers the Credit for the Elderly or the Disabled

D. Business Tax Incentives:

  • Deduction for removing architectural and transportation barriers for accessibility
  • Disabled Access Credit for eligible small businesses

E. ABLE Accounts:

Outlines the benefits and rules of Achieving a Better Life Experience (ABLE) accounts, which are tax-advantaged savings accounts for individuals with disabilities.

Who is Considered Disabled?

The IRS defines a person with a disability as someone with:

  • A physical or mental disability that functionally limits their ability to work.
  • A physical or mental impairment that substantially limits one or more major life activities (e.g., walking, speaking, seeing, hearing, learning).

Who Benefits from Publication 907

A. Individuals with disabilities, including:

  • Those with physical or mental impairments that limit major life activities
  • Individuals who are blind or deaf

B. Caregivers and family members of individuals with disabilities

C. Tax professionals advising clients with disabilities