The video refers to Form 1040-A which has been discontinued. The transcript below is accurate for the current tax year.
Video transcript:
Hello, I'm Sara from TurboTax with important news for disabled tax payers.
Suffering from a disability that keeps you from working can really limit the amount of income you have to live on. This is why the Federal government offers you some tax relief.
If you had no choice but to retire earlier than you planned because of a permanent disability, chances are you qualify for the Elderly and Disabled Tax Credit.
- This credit reduces the amount of income tax you owe on a dollar for dollar basis.
- When claiming the credit, you must file your taxes using form 1040 since you must attach schedule R to your return.
Although it's available to all taxpayers, your disability may increase your itemized tax deduction for medical expenses.
- The deduction includes a wide range of expenses that relate to maintaining your health but commonly include your hospital and doctor bills as well as prescription medications you need.
- When you total these up for the year on your Schedule A you can deduct the portion that exceeds 7.5 percent of your adjusted gross income.
If you receive tax exempt disability payments and your other taxable income is relatively low, the Earned Income Tax Credit may increase your tax savings.
- Even if you don't owe taxes for the year, you should still claim the credit since it permits you to claim a refund when it exceeds your tax liability.
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