Permanently and Totally Disabled

posted Mar 2, 2012, 4:08 PM by Wayne Culp   [ updated Sep 19, 2014, 2:46 PM ]
A person is permanently and totally disabled if both of the following apply.
1. He or she cannot engage in any substantial gainful activity because of a physical or mental condition.
2. A physician determines that the disability has lasted or can be expected to last continuously for at least a year or can lead to death.

Item 1 is a legal definition contained in the Internal Revenue Code.  As volunteer tax preparers, we can generally rely on the required physician statement.  There are other federal programs that use the same legal standard for permanently and totally disabled, for example Supplemental Security Income (SSI - a federal assistance program for the disabled) which is administered by the Social Security Administration.  People that receive SSI generally are permanently and totally disabled, however, these people are encouraged to work and can accumulate income and wages, so tax preparers should be careful to follow the required physicians determination.

A template Physicians Statement is attached below.  Also, review the qualifying child flowchart.  There are many deductions and credits for tax payers when a permanently and totally disabled qualifying child or relative lives with them.  A good discipline in tax preparation is to include all people that live in the tax payer's home on the Main Information Sheet.  Classify them as Code "0" if they are not a dependent but always click EIC and let TaxWise work through its qualifying process.  A permanently and totally disabled person can qualify a tax payer as head of household without the disabled person as an exemption.
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Wayne Culp,
Mar 2, 2012, 4:08 PM
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Wayne Culp,
Mar 2, 2012, 4:08 PM
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p524.pdf
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Wayne Culp,
Mar 2, 2012, 4:08 PM
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