Many people in New Jersey have family members — children or adults — residing in their homes, who have special needs. These individuals pay and sacrifice a lot to care for these family members. With careful tax planning, it is possible for them to save a bit, reduce costs and limit their tax liabilities.
When it comes to tax liabilities, there are a number of items that can be deducted and various credits that can be applied that can reduce how much a family with a special needs person has to pay. Where people can save the most is by deducting qualifying medical expenses. The list of what that includes is fairly long, but a few examples include:
- Medication costs
- Therapy expenses
- Capital expenditures
- Special schooling costs
- Medical facility and in-home care expenses
When it comes to credits, there are both refundable and non-refundable credits available. The two refundable credits are the Child Tax Credit and the Earned Income Tax Credit. The non-refundable credits are the Dependent Care Credit and the Adoption Expense Credit. Each of these has various qualifying factors one has to meet to be able to claim them come tax time.
Finally, the last thing that will be discussed is retirement fund distribution penalty waivers. Currently, those who withdraw funds from such accounts early have to pay a 10% penalty. Anyone who meets the approved definition of disability and who is receiving Social Security Disability payments may withdraw funds early, penalty-free.
Taxes are a part of life that is not going away. New Jersey families with special needs can help themselves and their pocketbooks by making sure they are doing all they can to limit their tax liabilities. An experienced attorney can assist these families with their tax planning needs to ensure they take advantage of all the benefits offered to them.
