What tax credits are available to people with disabilities

The federal government offers three main tax credits that people with disabilities or SSDI recipients may claim: the Earned Income Tax Credit (EITC), the Child and Dependent Care Credit, and the Credit for the Elderly and Disabled. Each has different income limits, different rules about what counts as income, and different forms you file with your tax return. Not all three will explore to your situation—which ones you can claim depends on your age, your income, whether you have dependents, and how much you earned.

The key difference between these credits and deductions is that a credit reduces the tax you owe dollar-for-dollar, while a deduction reduces the income that gets taxed. A $500 credit saves you $500 in tax. A $500 deduction saves you tax only on that $500—usually $100 to $150 depending on your tax bracket. Credits are almost always worth more.

SSDI benefits themselves are not taxable income for purposes of these credits, but other income you receive—wages, self-employment income, interest, dividends—counts toward the income limits. This matters because it can change whether you may have access to or how much credit you receive.

Key Takeaways

  • The Earned Income Tax Credit can return $600 to $3,700 depending on your income and dependents, and SSDI does not count against the income limit.
  • The Child and Dependent Care Credit covers up to $3,000 in care costs per year if you paid for childcare or adult care so you could work.
  • The Credit for the Elderly and Disabled applies if you are 65 or older or permanently and totally disabled, and your income is below $17,500 (single) or $21,875 (married).
  • You claim these credits on Schedule 1 (Form 1040) or on the specific schedules the IRS provides for each credit.
  • Work incentive programs like Impairment Related Work Expenses (IRWE) can reduce your countable income for SSDI purposes, which may also help you may have access to for larger tax credits.

The Earned Income Tax Credit (EITC) and SSDI recipients

The Earned Income Tax Credit is a refundable credit, meaning if the credit is larger than the tax you owe, the IRS sends you the difference as a refund. For 2024, the maximum credit ranges from $600 (if you have no children) to $3,700 (if you have three or more may have access to children). The income limits are roughly $15,000 to $60,000 depending on filing status and number of children.

The crucial rule for SSDI recipients: SSDI benefits do not count as earned income and do not count toward the income limit. Only wages, self-employment income, and other earned income matter. This means you can receive SSDI and still claim the full EITC if your wages are low enough. If you work part-time and earn $10,000 a year, your SSDI does not reduce your credit—only the $10,000 counts.

You claim the EITC on Schedule EIC (Form 1040) or through the IRS Free File program if you use tax software. The IRS also has a tool on its website where you can estimate your credit before you file. You must have earned income to claim it—SSDI alone does not may have access to you, but even $1 of wages can make you may be able to access if your total income is low enough.

The Child and Dependent Care Credit for work-related expenses

If you paid someone to care for your child (under age 13) or a dependent adult so that you could work or look for work, you may claim the Child and Dependent Care Credit. The credit covers up to $3,000 in care expenses per year (or $6,000 if you have two or more dependents), and the credit itself ranges from 20% to 35% of that amount depending on your adjusted gross income.

The care must be work-related—meaning you paid for it specifically so you could work or attend work-related training. Summer camp, school tuition, and overnight care do not count unless they are part of a work arrangement. You must also provide the name, address, and tax identification number of the care provider on your return, or the IRS will reject the credit.

SSDI recipients can claim this credit if they earned wages during the year. The credit is not refundable, so it can only reduce your tax liability to zero—it will not generate a refund. You claim it on Form 2441 and attach it to your Form 1040.

The Credit for the Elderly and Disabled

The Credit for the Elderly and Disabled is a smaller credit—the maximum is $750 (single) or $1,125 (married filing jointly)—but it is designed specifically for people with disabilities. You may have access to if you are 65 or older, or if you are permanently and totally disabled and under 65.

"Permanently and totally disabled" has a specific meaning under tax law. You must be unable to engage in any substantial gainful activity because of a physical or mental condition that is expected to last at least 12 months or result in death. You do not need to be on SSDI to claim this credit—you can be denied SSDI and still may have access to for the tax credit if a doctor certifies the disability. However, if you are on SSDI or SSI, the IRS will accept that as proof of permanent and total disability without requiring additional certification.

The income limit is $17,500 (single), $21,875 (married filing jointly), or $13,750 (married filing separately). SSDI benefits do not count toward this limit. You claim the credit on Schedule R (Form 1040) and must attach a statement from your doctor or a copy of your SSDI award letter as proof.

How SSDI work incentives interact with tax credits

If you are working while on SSDI, you may be able to use Impairment Related Work Expenses (IRWE) or other work incentives to reduce your countable income for SSDI purposes. These same expenses may also reduce your adjusted gross income for tax credit purposes, which can increase the credits you receive.

For example, if you pay $200 a month for a personal assistant to help you work, that $2,400 a year can be deducted from your SSDI countable income (under IRWE rules) and may also be deductible on your tax return. This lowers both your SSDI benefit calculation and your taxable income, potentially increasing your EITC or other credits.

Work incentive programs like Plan to Achieve Self-Support (PASS) can also help. A PASS allows you to set aside income and resources for a work goal without losing SSDI. The income set aside under a PASS does not count toward SSDI limits, and it may also reduce your taxable income for tax purposes, depending on how it is structured. Talk to your SSDI work incentive specialist or a benefits planning counselor before claiming large work expenses, because the rules interact in ways that can either help or hurt you.

Filing your return and claiming multiple credits

You can claim more than one of these credits on the same return if you meet the rules for each. For instance, you could claim the EITC and the Child and Dependent Care Credit in the same year if you have earned income, dependents, and paid for care. You cannot claim the Credit for the Elderly and Disabled and the EITC in the same year—the IRS will only allow one—but you can claim either one along with the Child and Dependent Care Credit.

File your return using Form 1040 and the appropriate schedules: Schedule EIC for the EITC, Form 2441 for the Child and Dependent Care Credit, and Schedule R for the Credit for the Elderly and Disabled. If you use tax software or file through a tax preparer, the software will ask you questions about your situation and automatically include the right forms.

The IRS Free File program allows you to file for free if your income is below a certain threshold (roughly $79,000 for 2024). Many community organizations and legal aid offices also offer free tax preparation for people with low incomes. If you receive SSDI, you likely may have access to for free filing.

What income counts and what does not

For tax credit purposes, earned income includes wages, self-employment income, and taxable scholarship or fellowship grants. Unearned income includes interest, dividends, capital gains, pensions, annuities, and SSDI benefits. The distinction matters because the EITC requires earned income, while the Credit for the Elderly and Disabled counts both earned and unearned income toward the limit.

SSDI benefits do not count as earned income or unearned income for purposes of the EITC or the Credit for the Elderly and Disabled. This is a major advantage: you can receive a full SSDI check and still claim the full credit if your other income is low enough. However, if you also receive SSI (Supplemental Security Income), that does count as unearned income and does count toward income limits.

In-kind support and maintenance—such as food or shelter provided by someone else—does not count as income for tax purposes, though it does count for SSDI purposes. If someone gives you a place to live rent-free, that does not reduce your tax credits, but it does reduce your SSDI benefit.

Frequently Asked Questions

Can I claim the EITC if I only receive SSDI and no wages?

No. The EITC requires earned income—wages or self-employment income. SSDI alone does not may have access to. However, if you earn even $1 in wages, you may be able to claim the credit depending on your total income and family situation.

Do I need to report my SSDI on my tax return?

SSDI is not taxable income, so you do not report it as income on your Form 1040. However, if more than half your income comes from SSDI and you have other income, you may need to report it on line 5b of Form 1040 to determine whether any of your benefits are taxable. In most cases, SSDI is not taxable, but the IRS wants to see it reported so they can verify.

What happens if I claim a credit I do not may have access to for?

The IRS will disallow the credit and send you a notice. If the error was unintentional, you may owe back taxes plus interest but usually not penalties. If you are unsure whether you may have access to, use the IRS online tools or ask a tax preparer before filing. Claiming credits you do not may have access to for can trigger an audit.

Can I claim the Credit for the Elderly and Disabled if I am on SSDI?

Yes, if you are under 65 and permanently and totally disabled. SSDI is accepted as proof of permanent and total disability. You must attach a copy of your SSDI award letter to your return or file Schedule R with a doctor's statement.

How do work expenses affect my tax credits?

Work-related expenses like transportation, equipment, or personal care can reduce your adjusted gross income, which may increase your EITC or other credits. However, the rules are complex and depend on whether the expense qualifies under SSDI work incentive rules, tax deduction rules, or both. Speak with a benefits planning counselor before claiming large work expenses.