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Why is the IRS so adamant for people with disabilities to file tax returns?

It may seem impossible to believe, but the 2017 tax filing season officially began last Monday, meaning the countdown to Tuesday, April 18, 2017, this year's deadline for filing 2016 tax returns, has officially begun.

Interestingly enough, the Internal Revenue Service is now urging both taxpayers with disabilities and the parents of children with disabilities to make sure they complete this typically tedious task over the next several months. However, its motivation in doing so isn't to secure more tax revenue, but rather to ensure that these individuals take advantage of the Earned Income Tax Credit, or the EITC.

What is the EITC?

In general, the EITC is a federal income tax credit available to those individuals whose incomes were $53,505 or less in 2016, and who satisfy other requirements. Given its status as a refundable credit, qualifying taxpayers who claim the EITC may end up paying lower federal income taxes, paying no federal income tax whatsoever or securing a generous refund.

In order to qualify for the EITC, however, a taxpayer must have "earned income," typically meaning income derived from self-employment, a job, or taxable benefits received via an employer's disability retirement plan (until the recipient reaches minimum retirement age). Neither Social Security benefits nor Social Security disability benefits count as earned income.

Won't people who claim the EITC see their eligibility for SSDI benefits compromised?  

The IRS is going to great efforts to remind people that refunds from tax credits like the EITC do not count as income for the purposes of determining eligibility for benefits provided by federal programs, or any state/local programs subsidized with federal money.

In other words, those receiving SSDI benefits for themselves or their children do not have to worry about the possibility that claiming the EITC will jeopardize these much-needed benefits.

How many disabled Americans are missing out on the EITC?

IRS estimates show that an astounding 1.5 million disabled Americans miss out on the EITC by failing to file a tax return. Indeed, these people are typically not obligated to file returns, as they fall below the income filing threshold, but would nevertheless need to do so in order to claim the credit.

Here's hoping the word gets out about this important tax benefit …

Whether you have questions about pressing tax law matters or SSDI benefits, consider speaking with a skilled legal professional who can supply the necessary answers and pursue the necessary action.

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Mr. McKellar was voted by his peers as a “Top Attorney” by Knoxville’s CityView magazine in its 2010, 2011, 2012, 2013, 2014, and 2015 editions. In 2014, 2015, and 2016, Mr. McKellar was selected as a member of the “Top 100 Trial Lawyers” by the National Trial Lawyers.

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