14# Disability Tax Benefits # 4 of 2022

April is always a month of the excitement because spring is starting. But April does have one single gloomy day - tax day. With all of the tax incentives, you may imagine that disability taxes are plentiful. While the disability community is diverse in the type of disabilities and abilities, federal tax breaks take an extremely limited view on defining a person with a disability.  In this episode the following questions will be addressed:

• What tax benefits does IRS provide because of your disability and why?
• Does my state provide a tax-exempt because of my disability? 
• What about modifications I did to my home to make it more accessible to me?

Cush Pocket, a proud sponsor, is a disabled owned company that sells wheelchair bags. Get $1 off by using code Angela Fox 

Transcript

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Welcome to AI Home Podcast, the first podcast for real estate resources and independent living strategies for the disability community. Why? Because accessibility is home. Hi, I'm Angela Fox, blogger, author, and your host. Please stay tuned to the very end to learn about my free handouts and more importantly, how answering the call to action I will give you at the end can well lower the kitchen sinks but raise the bars for disability home ownership. Now, let's begin. April is always a month of excitement because of spring cleaning and bruising up your home for the outdoor living that's about to happen around the corner. But April also does have one single gloomy day, tax day. With all the tax incentives, you may imagine that disability taxes are plentiful. While the disability community is diverse in the type of disabilities and abilities, federal tax breaks take an extremely limited view on defining a person with a disability and what incentives, tax incentives they do give. Outside the traditional income generated from employment, there are a variety of benefits that you may receive because of your disability that actually could still be considered income, such as your social security disability. So don't just assume that the money you get because of your disability does not need to be claimed as income. Please consult your CPA or tax accountant for this information and everything else I'll be discussing today. But what happens if you are disabled and employed? I mean, does my state also provide a tax exam because of my disability? What about the modifications I did for my home to make it accessible to me? These are the questions I'm gonna be discussing to you today. The IRS does allow you to claim yourself as disabled, a child or direct family member with a disability. The person must have a permanent and total disability. Permanent and total disability is a coined phrase by the IRS. Under the Americans with Disability Act, it does require your disability to be permanent. So that's nothing new. An historical case law underneath the ADA has made a permanent mean that it's happened is longer than for a year. So when the IRS provides their definition of permanent, it may sound a little familiar. The IOS defines permanent in three potential ways. One, a disability lasted continuously for at least one year, so like the ADA. Or will last continuously for at least a one year. So that means maybe became disabled halfway through your attack year. But it you know it's going to be expected that it's going to be longer than a year. Or the third way is death. Yes, it says Lily can lead to death. Pretty gruesome, if you ask me. A doctor's note is required to make this determination, so you can't just declare it yourself no matter how seasoned of a disabled person you are. But the total disability is not based, the definition of total disability, which is the second half of the coin phrase of IRS, it is not based on the medical severity, as you may think. Why? Because you know, ADA does kind of look into that. It is rather total disability by the IRS is based on whether your disability prevents you from engaging in any substantially gainful activity because of your disability. No gainful activity is not a life activity as defined by the ADA. Simply, gainful means how much money you make based on the activity of employment. Substantial gainful activity for a legally declared blind person is saying that you can make no more than$2,260 a month that was out in 2022. So that's less than$2,300 a month you can make if you're blind. For anyone else, the amount mean any other disability doesn't matter what it is, the amount is$13.50. So you can only make$1,350 monthly. Another way of looking at this is that for the entire year, if you're blind, you can't make more than$27,000 for the whole year to take this, or$16,000 for the whole year if you have any other disability. I am not sure how this is helping the disability community since it still puts us in the poverty level to get any breaks. But it is not surprising to me. It may be surprising to you, but being in the house disability housing industry is not surprising. Simply because when you're looking to develop homes, and I'm not talking group homes, but when you're looking into developing housing for disabilities, while there are HUD-specific and a little bit USDA specific uh programs out there to assist that offer disability, but realistically, when you're trying to get all the money, the focus must always be on low income. It cannot be based on solely disability. On one hand, I understand because we want to move beyond group homes, we want to move beyond institution. But to say that that is the only way you can focus on disability housing, or if you are, that de facto it must be a group home or institution, is not understanding disability housing at all. And I get that a lot when I'm working with the disability community and I ask, what do you want in disability housing? Is there any disability housing out there? And initially, people go into the mind frame of group home or or institution for a very good reason, right? Because that historically has been the case and in a lot of ways still is, whether you call it a group home or not. But rather, when you're developing housing, it's to ensure that so many units, whether it's an apartment or particular houses in the housing development that are accessible for a variety of disabilities. I'm under the belief that every house, whether it's a house, single-family home, a an apartment, a condo, should all have some disability features, especially if you're focused on university design, because then anybody can use it. But in reality, is a lot of healthy developers are trying to ensure that a portion is available for the disability community, and I commend that. And then there'll be other individuals that can buy uh the housing, whether single family or a condo. But at the end of the day, the federal government or state government, number one rule everything has to be low income. You cannot just focus on disability, you can't par it up. It's very difficult to get separate loans for disability and another loan for you know housing that may not be low income. The focus is low income. And so as a result, being in the disability housing uh industry, I understand, or at least I don't agree with it, but it's not surprising that IRS um does provide based on poverty level. Well, the disability community has raised this concern about IRS in the deduction of focusing on low income and to make sure that the disability community is not being entrapped into poverty. Through over a couple decades-long grassroots campaign, the Achieving a Better Living and Equality ABLE was passed. I have spoken about this historical ABLE Act on numerous occasions in my podcast, my blog, and of course my book, My Blue Front Door, that can be found. I think it's commending, and I was very fortunate that I was able to be on Maryland's tax force in implementing the ABLE Act for the state of Maryland. But what is it? The ABLE Act allows you to place any income or gift of income up to$15,000 a year. Now, hold your horses. You may say, wait a minute, the tax, the IRS tax credit was only six, I can only make sixteen thousand dollars a whole year, and now you're saying I can only do 15? That's not the beauty of it. It's not the it's not the 15. What is beauty about it is that you can roll this account, this separate account you set up, and you can roll it over from year to year. Meaning you don't have to spend all 15k that year, you don't lose it, it's capped at$100,000. So you can literally have this account and put your income into it or gifted, no more than$15. It can be more, however, if you have a job and your job doesn't provide you a pension, so it can't be more. But you can put this$15,000 in every year, and each year keep doing adding$15,000 until you reach$100K. While the money, and this is a federal IRS program, so that's why I'm talking about the ABLE Act. While the money is not a tax credit, the income is not counted when earned or used for anything related to your disability. The disability community has said that it's super expensive to being disabled, and I'm gonna talk a little bit about more about that and how I'm concerned how IRS is only focusing on one particular disability for the credit with blind, but we all know it's expensive, and it's it's beyond the just medical expenses, so you can use this money for anything that is related to your disability, maybe the the inequality. So, for example, you may have to take taxis to go to the bar to go see a friend. Doesn't have to be to uh a doctor's appointment. You can deduct that if you can't drive, if you need help, um clean your house, like I do. I have a house cleaner that comes in once a month. I deduct that, so it doesn't have to be medical, it just has to be related to your disability. And IOS has said we want to do this super liberal, so they say you can count your rent or your mortgage payments. You heard me right. It doesn't have to be a low house low income housing, you don't have to be in a specific housing program. Simply you're disabled, and I'll talk a little bit about how you qualify as disabled for the Able Act. But if you do, you can deduct your mortgage or your rent, which is pretty cool for that. Um, and so how do you qualify? One is you are on social security disability, realistically, is the focus of the Able Act, and the reason why I say that is that if you are on Social Security Disability, you're probably very familiar that you can't make any money, right? I know when I was on it at start school uh in college and I got a job, and they told me if I made more than$20, they're gonna start deducting my social security disability. I was flabbergasted. Luckily, I was able to use a ticket to work program, which just came out when I started college, and I was able to use uh acquire money, whether alone or through employment, and say I'm using this for for education that I need in order to get a job, and that was a ticket to work program. But if you're on social security disability and you don't find not involved in that, or you don't know any other exceptions, you can't really make any money, and you can't even have more than$2,000 in your bank account on top of that, and so that's where you know the disability community say this is how we are being entrapped in poverty. We need that money, we need the medical services that often tie once you qualify for social security disability. And so with the ABLE Act, they say, you know, hey, if you're on Social Security Disability, you qualify uh for this act, you can earn income, and it you will not lose your social security disability. And a lot of states, because again, ABLE Act is a federal, it's a federal tax as a federal program, each state has to implement it, and a lot of states, for example, Maryland, has say, hey, you know what? If you get state benefits and you are a social security disability, the money you have in the ABO Act account you earned or spend does not qualify as income, and therefore you won't lose your state benefits. But each state is is specific, so please look up your state for that particular for the ABO Act. Also, a lot of these places, a lot of the states, excuse me, a lot of the states allow you to um invest into uh the stock market, and I do that. So that's another cool way, but just be mindful your the the dividends that you may give get from stock is in you know is incorporated into the act. So you need to make sure at the end of the day, no matter how you get the money, uh stock, friend, family, employment, grant, whatever, however, you get it outside of uh social security, disability, things like that, that any money you put in the account can't be more than 15k per year, unless you don't have a pension. So we talked about the fact that IOS does allow you to claim yourself at disabled. We talked about the Able Act account. What about medical expenses and housing? And what does that have to do with each other? The IRS provides the ability to include deductions on medical expenses that are necessary and not for general welfare. If you make a if you make a purchase for a special equipment, like a sail lift for a medical need, then IRS will count that as a medical expense. You may not think about, but at the same time, me going to my doctor and having a no to get my batteries replaced for my wheelchair, I don't really consider the batteries a medical expense, but you know, my insurance does. So that's why it's not surprising to me. For the home, other home improvements can also count as medical expense if it accommodates the home because of your disability condition. However, if a home modification increases the value of the home, then the medical expense is only partially deducted, meaning that you take the value of the home and you have to deduct the medical expense, and there's a this voodoo economic um math equation that I don't know. Highly recommend you talk to a CPA, but then at the end of the day, if you add value to your home because of what you added for a modification, because of your disability, then it's not just a straight out deduction of the full cost. But I want to read exactly what IRS' opinion is. Why would IRS make this? Hey, if it adds value, then you don't get the full expense. Like, what? Well, let me read exactly what they say. Certain improvements made to accommodate a home to your disabled condition or that of your spouse or your dependents who live with you don't usually increase the value of the home, and the cost can be included in full as medical expense. Let me paraphrase that and read specifically again what IRS's opinion is. Certain improvements made to accommodate a home because of your disabled condition don't usually increase the value of the home and the cost can be included in full as a medical expense. Wow, right? When I came across this abler statement that modifications to a home don't usually increase the value of it, I was shocked and then I kinda simply giggled inside. Why? First, most modifications that are both cosmetically appealing and follow the universal design principles, because that means anybody can use it, will make your home marketable. They are thinking just specifically to you, and in that regard, a home value is not based on your enjoyment of the home. I wish it was, right? Wouldn't it be great, you know, that you could say, hey, I have 40 years of wonderful memories and enjoyment, therefore, my house is worth something that's maybe brand new. It doesn't work that way. But if you make a home that is accommodating for a variety of individuals, whether it's children or elderly or disabled, which is part of the universal design, then I guarantee you you add value to your home. In fact, the Living in Place Institute, which I'm a member of right now, was asked by a well-known renovation magazine to give the cost of making universal design wheelchair bathroom and then the estimated added value of that new home of that new uh universal wheelchair bathroom. I love Living in Place Institution. They didn't want to just shoot from the hip, and they said, Hey, can you can we do this next year? Can we can we give you your answer in an article next year? Because Living in Place Institute has a part of the network. They have interior design, architects, housing developer, consultants such as myself, lawyers like myself, all kinds of people involved as part of the network of Living in Place. And they want to give an opportunity for everybody to be included. And sh and they did. And after a year, would you know it? Not only did they give you say this is how much it costs to do a wheelchair uh universal bathroom, but then it added a significant value to that bathroom. So you don't have to take my word for it, you don't even have to take the disability community word for it. You take the word for uh individuals, the same individuals that the able-body community hired to do their own interior design, hire to do the housing developers, and they all contribute to that. So there is always value added if you do it right. Pretty incredible knowing this that IRS will make it so easy to qualify deducting home modification costs when in reality many homes value could be worth more. But shhh, we won't tell them. In this instance, it literally pays the disability community for the IRS to both be ignorant and ableist. Let's talk about your state. Because the reason why I want to talk about your state is a I don't want you to lose any any any tax uh state tax deductions, but also, and I talk a lot about this in my podcast episodes and blog, but there's such a great myth about what the Fair Housing Act cover, or even the ADA, the Americans with Disability Act covered. And that is the Fair Housing Act does not apply to housing that is not funded by state or federal government. Basically, any housing that's not funded by local, state, or federal fund is not governed. In other words, if a home was privately funded and is privately owned, such as a single family house, the Fair Housing Act provides nothing as a requirement for things to be accessible. And this is why 2%, only 2% of all homes, in fact, are accessible for mobility impairments. Not wheelchairs. Mobility impairments is the range. So these these are individuals that have trouble walking, have uh they can they can't walk that far, they can only stand, they can, you know, only go a few steps. And then there's individuals such as myself who are in in a wheelchair, they can't walk or stand. In the year wheelchair full-time. So mobility impairments is the range. It's just what it says, mobility and pair mits. And only uh two only two percent of housing in the United States are accessible for mobility and pairs. There's two reasons. One is the Federal Housing Act doesn't require single-family homes that are not uh funded by the state or funded by the federal government, they can do whatever they want. And another thing is I think a general misunderstanding of the cost of living for different types of disabilities. I mentioned to you that I had concerns that IOS was just focusing on blind, those who are legally blind, as having a higher uh ability, you know,$27,000 for the year ability for substantial gain versus uh$16,000 per year for other disabilities. And this has nothing to do with my disagreement that blind is not a disability that has extreme economic inequality and extreme discrimination because people who are legally blind certainly do. But when I started to research why IOS parceled out this only disability, and a lot of information I I re I saw was very outdated, which you know that's how that's how federal government works, right? They they they make a ruling to make uh procedures, and then it takes decades for them to revisit it, right? And so that's just the reality of it. But the reason why they parceled out blindness was their belief, and and at that time, I'm sure it was very, very true, that these individuals, people who are blind, have to have everything in braille, and that's an additional cost, right? Everything has to be in braille, they may have to buy a TDY um to be able to talk on the phone. And they also said, uh, which I thought was really interesting, that because they can't drive, that they will have to live in cities where there's public transportation and renting again, they didn't care about disability home ownership, but in renting, they said that those um apartments complex and big cities will be more expensive. Absolutely true, but I find it interesting that one they didn't apply the housing situation to other disabilities, and as technology has increased, I wondered myself, is Braille really the go-to for individuals who are blind? And I'm a millennial, so I uh I adapt to technology, I research, and according to the blind association, one out of ten people who are legally blind use braille today. Only one out of ten. And why? Because they're using the smartphones, right? They're the everything you you've seen dragon speak, maybe being advertised to be able to dictate your notes, and so in reality, braille is not a big thing in uh the community who are blind, and so that's not an additional additional cost necessary. Not that they don't have additional costs, just being blind, and they certainly do. So if you are in a wheelchair, you know the cost of a wheelchair for those who are listening, like my my real estate or my housing developers or my advocates and allies. Here's a breakdown for wheelchairs, spend ten thousand dollars or less if you're lucky, on a manual wheelchair. If you're looking for a scooter and a scooter is one with the third wheel up front, then you're talking about anywhere between$15,000 to$18,000 without insurance. Then, if you're talking those wheelchairs that do not have a front wheel such as I use, you can get it as cheap as$20,000, maybe$19,000, but it ranges between$19,000 and$23,000. And then you want to get wheelchairs that are just better quality. I buy mine from Promo Biosy, and I spend about$28,000. And then if you want if you want a standing wheelchair, that's good luck with that. That's$30,$30,000 to$40,000, right? So, and this is all without insurance, but why insurance only covered 60% of that? And so if you're starting out with$28,000, 60%, while you're grateful, that's still a big chunk of change. Another thing you need to also consider is that those wheelchairs need maintenance, and those wheelchairs don't last forever. I need to get a wheelchair between every four to five years, and Medicare has adopted that as a general principle. Uh, it's very interesting that IRS has not taken consideration those, you know, those disabilities that have uh recurring medical expensive to be able to be out and about in a community, not not necessarily treatment. And they have not done it, they've only parceled it out for blindness. And it's also very disappointing that when it comes, you know, to the housing situation, that they don't realize that people who have mobility needs have a much more expensive disability for housing internet, whether it's for ownership or for rent, because people who are wheelchair may not be able to drive. And so they too will need public transportation. That's only found in cities. And I really do hope that the federal government, while they were IOS pass that Achieving Better Living Act, Equality Act bill to say, hey, you have expenses beyond medical. It's fabulous that they go back to their credits and to some of their deductions and really look at those disabilities that do have significant economic inequality and discrimination. Now, let's talk about states. Um, I don't want you to miss out on states, but they are just as limiting as federal. When you're looking at states, their biggest thing is about property taxes. That's where you go will find the benefit. It's very similar to the fact that when IOS says, hey, if you spend money to do a modification to your home and it's for your disability, that you in fact can deduct it. But unlike iOS Greed, where they say, hey, you can't add value, don't add value to that home. A lot of states that do have this, uh, don't really care about the value added to the home. It's just, do you have a disability and do you need to add a modification? And you can deduct that. In the state of Maryland, and it varies from state to state. It's simply they often can call it like the independent living tax credit property tax. For example, it's not exactly that, forgive me, but it's it's basically an independent living. So that is a term that you want to Google. Independent living credit, look into your state. Now, outside of that, it really depends where you fall in the spectrum of disability. And what do I mean by that? Well, I talk about this in my in my book, My Blue Front Door. But what you may not be aware, especially if you're new to the disability community or you're not a member of it, is that there are about five categories that really the states and local government and even federal government really look into when making a determination as to the resources that are available. Who who are they gonna target in the disability community is another way of thinking about it. And the five categories are are you a child with a disability, or do you take care of a child with a disability? Are you low income? They don't really care if you're disabled now, but are you low income? Um, are you 65 or over senior? As well as whether or not you are a disabled veteran. And then there's sometimes all the the income where I just talked about the very narrow exception when it comes to housing and as an independent living. Those are the five categories. So, what is missing in this, you may think? Well, it's the disabled working class. So if you're not low income, you're not a child with disability, you're not taking care of a child with disability, you're not 65 years or older, you're not low income, and you're you know, you're not disabled fat, there's not a whole lot there for you. And it's very disappointing because there is this idea that almost everybody who is disabled is low income, or it's overwhelmingly poverty, low income. And that's actually not true. 30% of the disability community is low income. Where people get traction or maybe stubble on that, that proportion at 30% is higher than any other minority. And they're absolutely right. So if you look at women as a minority, if you look at people of color, if you look at even a subgroup of like African Americans, absolutely, they these minorities do not have 30%. But that's still 30%. That means 70% everybody of the disability community is not low income, it's not poverty level. But yet, maybe listening to this, you may feel that wow, really? It's not it's not 60, it's not 55, it's not 70. No, it's not. It's just that when advocates rightfully so are advocating to address disability, that is a great way of saying 30%. And it's higher than any other minority. And they're absolutely right, it's spot on. It's just unfortunately then because there's so many stereotypes of people with disabilities, can't work, particularly if you get to specific disabilities of people who are blind, people who are paraplegic, you know, all you know, those those individuals who have a lot of hidden disabilities, they can't work, they are fully dependent on society. That is part of a society, and then you add that stat, it's going to just enhance that ability. And so that's I think impartial why if you are a the disabled working class, you're not being addressed when it comes to resources or even taxes. But what other you know, if you do fall in those other categories, where do you look? Because it's not universal. So I had talked about the federal government, that's IRS. Boom, you go to IRS, you can find everything about disabilities right on IRS's page. Great. But depending on what state you're at, it could be scattered among different programs. Where do you look? You first want to look to see if there is a disability office or department. Duh, right? But it's important. So in the state of Maryland, it's literally called uh Department of Disability, DOD. The second Google term that you might want to look into when you get to your state, where not there is a senior aging, aging in place, senior, senior citizen, elderly, those are places you want to use to Google and see if there's an office. And then the other one is of course being a disabled veteran and every state has a veteran's office because they want to pull in the VA benefits that the federal government gets. So it's really it's kind of a kind of a requirement. Those are the the type of terms that you might want to look into to see if you if you qualify for a tax credit deduction or any other resource to be a matter of fact. Now, it's really important to to be mindful that taxes are just the beginning of in of managing your money. And I highly also encourage that you go back to my previous podcast episode called Sense and Sensibility. It was in October 2021. And in Sense and Sensibility, I talk about how the in in Pennsylvania they were able to create this wonderful manual that helped you go through and looking at your managing your expenses, managing your money from A to Z from a disability perspective. Because that's what is really needed. You can't go necessarily to a CPA or go to a financial literacy course and really get any information that's specific for disability, like what things you need to consider. There's all kinds of worksheets, and it starts at from a very elementary level, and don't be insulted because it's really important that sometimes we you go back from square one, right? And I highly recommend everybody listen to my sense of sensibility podcast episode in October 2021. I have also a link on that on my website for you to be able to find the manual, and it's all free. So that is a big part that I hope you also incorporate, not just your taxes. Now, one thing I want to add is I always like to do a call to action, and the call to action is of course, is look into your own state and find out whether or not they are providing all the resources they can for tax credit for your for housing outside of just property if if improving. So, for example, in the state of Maryland, look at your county. In Montgomery County, they have a design for life program, and it allows certain modifications to a home that can be tax deducted on county taxes. But the beauty of design for life is that the tax deduction for the county stays with the home. That's an example of a really initiative that can really propel disability home ownership at the local level. So, my call to action to you is do you have something like that at your county? What do you have in your state? Do you have outside of the independent living credit that probably is what it's going to be called? What do you have? And if you don't have anything, talk to your county individuals, talk to your congresspeople and ask them and use other examples. That is your call to action. Thank you. After listening today, disability home ownership is that much closer. Whether you are a wheelchair user or a worker in the housing industry, but there is so much more I can provide you through horizontalhouses.com. Horizontalhouses.com is the hub for all things related to disability home ownership. You will find my blog, this podcast, my book, and how my consulting services can help real estate agents or healthy developers market and tap into the largest minority group, the disability community, all of which come from real-world experience as a working-class lifetime paraplegic who bought her first home during the Great Recession and successfully modified it. Please help me continue this exploration of disability home ownership by connecting through my Facebook page, Twitter, Instagram, Pinter accounts by either searching for Horizontal Houses on these platforms or visit directly the horizontalhouses.com website. Most importantly though, please subscribe to the email distribution list located on the website so you don't miss out on any updates I may have. Remember, sharing our collective experiences will allow us each to lower the kitchen sink but raise the ball with disability home ownership. Thank you!