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taxmap/pubs/p907-000.htm#en_us_publink10008627
Publication 907

 
Tax Highlights 
for Persons with 
Disabilities

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Future Developments(p1)


For the latest information about developments related to Publication 907, such as legislation enacted after this publication was published, go to www.IRS.gov/pub907.

What's New(p1)


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Health care: individual responsibility.(p1)
You must do one of the following.
  • Indicate on Form 1040, line 61, or Form 1040A, line 38, or Form 1040EZ, line 11, that you, your spouse (if filing jointly), and your dependents had health care coverage throughout 2014;
  • Claim an exemption from the health care coverage requirement for some or all of 2014 and attach Form 8965; or
  • Make a shared responsibility payment if, for any month in 2014, you, your spouse (if filing jointly), or your dependents did not have coverage and do not qualify for a coverage exemption.
See the Instructions for Form 1040, line 61, or Form 1040A, line 38, or Form 1040EZ, line 11, and Form 8965, Health Coverage Exemptions, for more information.
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Premium tax credit.(p1)
You may be eligible to claim the premium tax credit if you, your spouse, or a dependent enrolled in health insurance through the Health Insurance Marketplace. See the Instructions for Form 1040, line 69, and Form 8962, Premium Tax Credit, for more information.
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Advance payments of the premium tax credit.(p1)
Advance payments of the premium tax credit may have been made to the health insurer to help pay for the insurance coverage of you, your spouse, or your dependent. If advance payments of the premium tax credit were made, you must file a 2014 tax return and Form 8962. If you enrolled someone who is not claimed as a dependent on your tax return, or for more information, see the Instructions for Form 8962.
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Form 1095-A, Health Insurance Marketplace Statement. (p1)
If you, your spouse, or a dependent enrolled in health insurance through the Marketplace, you should have received Form(s) 1095-A. If you receive Form(s) 1095-A for 2014, save them. They will help you figure your premium tax credit. If you should have received a Form 1095-A but did not, contact the Marketplace.
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Medicaid waiver payments.(p1)
If you are an individual care provider who received certain payments under a Medicaid waiver program for caring for someone who lives in your home with you, you may be able to exclude these payments from your income. See the Instructions for Form 1040, line 21. If you reported these payments on your return for 2013 or an earlier year, see www.irs.gov/Individuals/Certain-Medicaid-Waiver-Payments-May-Be-Excludable-From-Income. You may want to file Form 1040X, Amended U.S. Individual Income Tax Return, to amend that prior-year return.
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Payments for injuries from a terrorist attack.(p2)
You may be able to exclude from your income disability payments you receive for injuries incurred as a direct result of terrorist attacks. See Terrorist attacks.
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Expired tax benefits. (p2)
At the time this publication was prepared for printing, certain tax benefits had expired, including the health coverage tax credit. You can find out whether legislation extended certain tax benefits to allow you to claim them on your 2014 return at www.irs.gov/pub17 or www.irs.gov/form1040.

taxmap/pubs/p907-000.htm#en_us_publink1000273760Introduction

This publication concerns people with disabilities and those who care for them. It includes highlights about:
You will find most of the information you need to complete your tax return in its instructions.
See How To Get Tax Help, at the end of this publication, for information about getting publications, forms, and free tax services.
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Comments and suggestions.(p2)

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We welcome your comments about this publication and your suggestions for future editions.
You can send your comments from www.irs.gov/formspubs/. Click on "More Information" and then on "Give us feedback."
You can also write to us at the following address.

Internal Revenue Service
Tax Forms and Publications
1111 Constitution Ave. NW, IR-6526
Washington, DC 20224


We respond to many letters by telephone. Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence.
Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products.
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Ordering forms and publications.(p2)
Visit www.irs.gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received.

Internal Revenue Service
1201 N. Mitsubishi Motorway
Bloomington, IL 61705-6613


taxmap/pubs/p907-000.htm#en_us_publink1000207
Tax questions.(p2)
If you have a tax question, check the information available on IRS.gov or call 1-800-829-1040. We cannot answer tax questions sent to either of the above addresses.
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Income(p2)

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All income is taxable unless it is specifically excluded by law. The following discussions highlight some taxable and nontaxable income items.
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Dependent Care Benefits(p2)

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Dependent care benefits include:
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Exclusion or deduction.(p2)

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If your employer provides dependent care benefits under a qualified plan, you may be able to exclude these benefits from your income. Your employer can tell you whether your benefit plan qualifies. To claim the exclusion, you must complete Part III of Form 2441, Child and Dependent Care Expenses. You cannot use Form 1040EZ.
If you are self-employed and receive benefits from a qualified dependent care benefit plan, you are treated as both employer and employee. Therefore, you would not get an exclusion from wages. Instead, you would get a deduction on one of the following Form 1040 schedules: Schedule C, line 14; Schedule E, line 19 or 28; or Schedule F, line 15. To claim the deduction, you must use Form 2441.
The amount you can exclude or deduct is limited to the smallest of:
  1. The total amount of dependent care benefits you received during the year,
  2. The total amount of qualified expenses you incurred during the year,
  3. Your earned income,
  4. Your spouse's earned income, or
  5. $5,000 ($2,500 if married filing separately).
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Statement for employee.(p2)

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Your employer must give you a Form W-2 (or similar statement), showing in box 10 the total amount of dependent care benefits provided to you during the year under a qualified plan. Your employer will also include any dependent care benefits over $5,000 in your wages shown on your Form W-2 in box 1.
taxmap/pubs/p907-000.htm#en_us_publink10008824
Qualifying person(s).(p3)
A qualifying person is any of the following.
For information about excluding benefits on Form 1040, Form 1040NR, or Form 1040A, see Form 2441 and its instructions.
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Social Security and Railroad Retirement Benefits(p3)

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If you received social security or equivalent Tier 1 railroad retirement (RRTA) benefits during the year, part of the amount you received may be taxable.
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Are any of your benefits taxable?(p3)

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If the only income you received during the year was your social security or equivalent Tier 1 railroad retirement (RRTA) benefits, your benefits generally are not taxable.
If you received income during the year in addition to social security or equivalent Tier 1 railroad retirement (RRTA) benefits, part of your benefits may be taxable if all of your other income, including tax-exempt interest, plus half of your benefits are more than:
For more information, see the instructions for Form 1040, lines 20a and 20b; or Form 1040A, lines 14a and 14b; and Publication 915, Social Security and Equivalent Railroad Retirement Benefits.
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Supplemental security income (SSI) payments.(p3)

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Social security benefits do not include SSI payments, which are not taxable. Do not include these payments in your income.
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Disability Pensions(p3)

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If you retired on disability, you must include in income any disability pension you receive under a plan that is paid for by your employer. You must report your taxable disability payments as wages on line 7 of Form 1040 or Form 1040A until you reach minimum retirement age. Minimum retirement age generally is the age at which you can first receive a pension or annuity if you are not disabled.
Deposit
You may be entitled to a tax credit if you were permanently and totally disabled when you retired. See Publication 524, Credit for the Elderly or the Disabled.
Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension or annuity. Report the payments on Form 1040, lines 16a and 16b, or on Form 1040A, lines 12a and 12b. See Publication 575, Pension and Annuity Income.
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Terrorist attacks.(p3)

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Do not include in your income disability payments you receive for injuries incurred as a direct result of terrorist attacks directed against the United States (or its allies), whether outside or within the United States. However, you must include in your income any amounts that you received that you would have received in retirement had you not become disabled as a result of a terrorist attack.
Deposit
Contact the company or agency making these payments if it incorrectly reports your payments as taxable income to the IRS on Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., to request that it re-issue the form to report some or all of these payments as nontaxable income on Form W-2, box 12 (under code J), or Form 1099-R, box 1, but not in box 2a. If income taxes are being incorrectly withheld from these payments, you may also submit Form W-4P, Withholding Certificate for Pension or Annuity Payments, to the company or agency to stop the withholding of income taxes from the payments.
Disability payments you receive for injuries not incurred as a direct result of a terrorist attack, or for illnesses or diseases not resulting from an injury incurred as a direct result of a terrorist attack, cannot be excluded from your income under this provision, but may be excludable for other reasons as described in this publication.
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Retirement and profit-sharing plans.(p3)

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If you receive payments from a retirement or profit-sharing plan that does not provide for disability retirement, do not treat the payments as a disability pension. The payments must be reported as a pension or annuity.
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Accrued leave payment.(p3)

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If you retire on disability, any lump-sum payment you receive for accrued annual leave is a salary payment. The payment is not a disability payment. Include it in your income in the tax year you receive it.
See Publication 525, Taxable and Nontaxable Income.
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Military and Government Disability Pensions(p4)

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Generally, you must report disability pensions as income, but do not include certain military and government disability pensions. See Publication 525.
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VA disability benefits.(p4)

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Do not include disability benefits you receive from the Department of Veterans Affairs (VA) in your gross income. If you are a military retiree and do not receive your disability benefits from the VA, see Publication 525 for more information.
Do not include in your income any veterans' benefits paid under any law, regulation, or administrative practice administered by the VA. These include:
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Other Payments(p4)

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You may receive other payments that are related to your disability. The following payments are not taxable.
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Long-Term Care Insurance(p4)

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Long-term care insurance contracts generally are treated as accident and health insurance contracts. Amounts you receive from them (other than policyholder dividends or premium refunds) generally are excludable from income as amounts received for personal injury or sickness. See Publication 525.
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Accelerated Death Benefits(p4)

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You can exclude from income accelerated death benefits you receive on the life of an insured individual if certain requirements are met. Accelerated death benefits are amounts received under a life insurance contract before the death of the insured. These benefits also include amounts received on the sale or assignment of the contract to a viatical settlement provider. This exclusion applies only if the insured was a terminally ill individual or a chronically ill individual. See Publication 525.