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Deductions for Assistive Technology
Assistive Technology and Taxes: Not a Perfect Fit
Reprinted with permission from from AT Journal, Vol. 70, April 2003
By Mitch Jeserich
From wheelchairs to adaptive computer software, people with disabilities spend a lot of money on assistive technology every year. What many people may overlook, though, is they may be able to claim AT purchases as deductibles when filing their federal tax forms. But it's not evident because neither the tax forms nor the tax guidelines have the words assistive technology printed in them.
"It is difficult to claim assistive technology," said Steve Mendelsohn, author of the 1996 book Tax Options and Strategies for People with Disabilities. "You have to figure out what tax deductible category it goes under."
To claim an AT device as a deductible, it must fit under an already existing IRS category: such as Medical Expenses, Payment Related Work Expenses or Miscellaneous Work Expenses. Medical Expenses could include such items as a wheelchair, special phone equipment and accessible modifications to a home or vehicle. Items that assist a person in employment, such as accessible computer programs, may qualify under Work Related Expenses.
For an AT device to qualify as a deductible, one must show that the device extenuates a disability or limitation. According to Mendelsohn, in a 1985 case in Tax Court, a man with a heart condition bought a car phone so he could call his doctor at any time. He claimed it as a Medical Expense. But he lost his case when the court found the number listed in a phone directory, suggesting its use beyond just calling his doctor.
Mendelsohn says a person who claims an AT device should thoroughly explain how it mitigates a disability and demonstrate that its purchase was motivated by the need for assistance.
If some entity, like the Department of Rehabilitation, were to buy the device, the person using it would be unable to claim it; unless, that is, that person paid for part of it. If so, that person can then claim the portion that she paid for.
IRS codes are murky at best and filing with the IRS is a complicated process that leaves the unsavvy tax filers missing out on savings.
"The IRS should take an active role is clarifying what is deductible," Mendelsohn said. "People with disabilities are mostly poor and can't afford to pay for help. The (IRS) system rewards people with inside knowledge. Access to information is not equitable to all people."
Businesses are also eligible for tax breaks with AT purchases that go towards accessibility, such as ramp or elevator. Also, speech recognition software bought for a worker who has difficulty typing could be claimed as a deductible.
There are also tax breaks for employers who hire people with disabilities who were referred to the employer by Vocational Rehabilitation.
There is a tax credit for the elderly and people with disabilities that earn less than $34,000 a year.
Barriers To Filing
Filing taxes is an onerous task, but even more so for people who are blind. Though the IRS claims it is compliant under Section 508 of the Rehabilitation Act, as its forms are available in alternative format, many blind individuals say they still need someone else to help them file, eliminating any sense of privacy with their financial information.
For obvious reasons the physical tax forms are not accessible to the blind. And Melanie Brunson, with the American Council of the Blind, says e-filing available through the IRS website is not much better.
"Whether you have a screen magnification software or screen reading software, you're going to have trouble accessing the (on-line) programs," Brunson said. "Sometimes, these programs don't work with adaptive technology, especially with screen readers."
The IRS web site does not have its own page for e-filing. Instead, it provides links to other companies contracted to do the work.
The IRS admits these websites might not reach the pentacle of accessibility standards, but it points out that the on-line filing organizations are non-governmental entities that do not fall under the auspices of Section 508 and don't have the legal requirement to meet accessibility standards.
Mendelsohn questions that assertion. "Because the IRS is contracting out to these links they may be required to follow 508 of Rehab Act. And if not, the IRS still has the option of requiring a company to have their website accessible before it agrees to a contract."
Regardless, people with visual impairments still have to find a way to turn in their taxes by April 15th.
"A lot of people with visual impairments have to pay someone or have a friend fill out the forms for them," Brunson said. "It's one thing if I choose to go to H&R Block, but it is another thing if I am forced to go. It is not fair if people with low vision or blind are forced to use these services."
Brunson also said on-line filing companies would be smart to improve the accessibility of their web sites because people with visual impairments are still looking for alternative options in filing taxes.
Everyone interviewed for this article said the IRS has made progress in meeting the needs of people with disabilities. And everyone, including the IRS, agrees—more must still be done.
The IRS plans to launch a new web site that deals with disability and accessibility issues. Also, the IRS has set up over 9,000 Free Tax Preparation Sites nationally.
The IRS has two programs that provide free basic tax return assistance for low income people with the disabilities, the elderly and non-English speakers: The Volunteer Income Tax Assistance (VITA) program and the Tax Counseling for the Elderly (TCE) program. For information on the closest volunteer site closest to you, you can call the IRS hotline 1-800-829-1040.