Lifelong Disability: How do I reduce my Income Taxes?

[adaya]

I have been disabled since birth. I have CP and am unable to walk and function normally. The only income I have is from investments I buy (Stocks, Bonds) from the malpractice settlement I received when I was 18. I own my home and car and my mom does not work but lives with and cares for me. My dad lives with me and collects SSI/SSD Benefits. Mom and Dad are not married. In addition my adult deaf and disabled cousin lives with me and collects SSD; my mom cares for him too. My yearly income ranges from 40 to 60 thousand earned in interest, capitol gains and dividends. My deductions are about 8 to 12 thousand a year. I have been claiming single but I owe the IRS thousands every year. What can I do to reduce my taxes owed? It took me over 2 hours to type this. Please help!

[napayshni65]

There is no magic deduction for being disabled. You are taxed as if you are NOT disabled.

Get IRS pub 501 and do the support test for each person who lives with you. You may be able to claim someone as a dependent. If they are your parents you can also claim HOH. (A cousin isn't good enough for HOH.)

[werner72]

Hi,

If you met all of the requirements, you can file as HOH with 3 dependents. ( see Pub 501 )

I supposed your income is about 60,000

60,000 - ( 8,400 + 14,600 ) = 37,000 this is your taxable income

Since your income includes Dividend and Capital gain, there is a worksheet to calculate tax liability,( Qualified Dividends and Capital Gain Tax Worksheet ) on page 37 of 1040 instruction.

http://www.irs.gov/pub/irs-pdf/i1040.pdf

If you give me your information, I can figure out for you. Do you have qualified dividends? This one is on box 1b of 1099 DIV.

For avoiding penalties, you should make estimate payments, see from page 40 of pub 17 :

http://www.irs.gov/pub/irs-pdf/p17.pdf

Best wishes.