The Federal Tax Law as a Subsidy for Assistive Technology

Steven Mendelsohn, Esq.
Consulting AT Policy Specialist
New York, New York
(smendel@panix.com)

James R. Sheldon, Jr.
Supervising Attorney
National AT Advocacy Project
Buffalo, New York
(jsheldon@nls.org

Bridges to Better Advocacy Conference
Austin, Texas
April 21-22, 2005

This handout provides the reader with a summary of a number of key tax provisions that can be used to put more money in the hands of a federal taxpayer and, in the process, provide a direct or indirect subsidy toward the purchase of assistive technology (AT) or other key disability-related items. We also briefly summarize several tax provisions that can be used by businesses to meet the disability-related needs of its customers or employees. This should not be viewed as a definitive resource on any of the tax deductions or credits discussed, but should be viewed as presenting possibilities for tax planning and AT funding. Keep in mind that the applicability of any tax provision may hinge on additional factors, such as marital status or age, not discussed in this handout.

I.        Introduction

          A. Struggling with the high cost of AT

                     1.  Individuals come to us to help them identify how to pay for AT for themselves, a spouse, or a child.

                     2.  If they are working, the AT may not be available through some of the more traditional funding sources:

                                a They may have too much income for Medicaid.#1

                                b   An employer-funded insurance plan may not cover many of the AT needs.

          B.       There are a number of provisions in the federal tax code that provide tax deductions, tax credits, or other favorable tax treatment to individual taxpayers or employers to lower tax liability if money is spent on disability-related expenses.

          C.       Your state may also provide disability-related tax deductions and credits to be applied against state tax liability. See, e.g., South Carolina, Department of Disabilities and Special Needs, Tax Bulletin, available at www.state.sc.us/ddsn/pubs/tax/tax.htm (discussing some of the special state tax deductions available in one state).

          D.       This handout will only cover the federal tax law.

II.       Some Working Definitions

          A.       Income

                     1.       Gross income (GI)#2

                                a.       GI is the total of what we receive that is subject to taxation. Of course, not all of it will be ultimately included in taxable income, because it will be reduced through the operation of adjustments, deductions and credits.

                                b.       Pre-tax exclusions are not part of GI.

                                           (1)      Some tax code provisions, like the flexible spending account (FSA)(see section V.B, below) or the tax deferred annuity (TDA), allow the taxpayer to exclude or divert income before it is taxed.

                                           (2)      Wages that are paid directly into an FSA or TDA will not appear as taxable income on the end-of-the-year W2 form and will not be reported as income on a federal tax return.

                                c.        Income that is not taxable

Certain forms of money (or income) that an individual with a disability receives are considered “not taxable” by the Internal Revenue Service (IRS). These forms of income will not be listed as part of gross income on the federal tax return. See IRS Publication 907, Tax Highlights for Persons with Disabilities. These include:

                                           (1)      SSI payments due to disability or blindness

                                           (2)      Workers' compensation

                                           (3)      Compensatory (but not punitive) damages, for physical injury or physical sickness.

                                           (4)      Disability benefits under a “no-fault” car insurance policy for loss of income or earning capacity as a result of injuries.

                                           (5)      Compensation for permanent loss or loss of use of a part or function of your body, or for your permanent disfigurement.

                     2.       Adjusted gross income (AGI)#3

AGI is arrived at after what are called adjustments or above-the-line deductions (form 1040, lines 23-34A) are subtracted from GI. AGI is important, among other reasons, because it provides the baseline for calculating the amount of certain itemized deductions.

                     3.       Taxable income (TI)

TI is the amount we actually owe taxes on. It is determined after subtracting either itemized deductions (such as medical expenses) or the standard deduction from our AGI.

          B.       Deductions and Credits

                     1.       Deductions

Tax deductions are of two types.

                                a.       “Above-the-line” deductions

                                           (1)      The IRS refers to these as “adjustments”

                                           (2)      The are deducted from GI to arrive at AGI.

                                           (3)      These are items like contributions to IRAs or other retirement accounts, or student loan interest payments.

                                           (4)      These can be taken whether one itemizes or not.

                                b.       Itemized deductions

                                           (1)      These are taken from AGI to arrive at taxable income.

                                           (2)      These include, for example, home mortgage interest, medical expenses, and impairment-related work expenses (IRWE's).

                                c.        All Deductions reduce income that is subject to tax.

                                           (1)      For example, if the taxpayer has $24,000 in GI and $5,000 in deductions, taxable income is reduced to $19,000.

                                           (2)      In this example, if the taxpayer is in a 10 percent tax bracket, a tax deduction of $5,000 will lower tax liability by about $500 (i.e., without the deductions, tax liability would be $2,400; with the deductions tax liability would be $1,900).

                     2.       Tax credits

                                a.       Credits differ from deductions in that credits come right off the tax liability itself.

                                b.       Let's go back to the previous example

                                           (1)      Assume the same $5,000 deduction and now assume an additional $4,000 as a credit.

                                           (2)      This would reduce the tax bill dollar for dollar to a theoretical minus $2,100. Since our taxpayer has TI of $19,000 and is paying at an overall 10% rate, this would mean a tax liability before any credits of $1,900 for the year. Only a $1,900 credit would therefore be needed to eliminate any income tax liability.

                                c.        Credits and deductions cannot be used to lower an individual's income tax below zero.

                                           (1)      There is one exception to this, the earned income tax credit, discussed in section IV, below.

                                           (2)      Unfortunately, you cannot use any excess income tax deduction or credit to offset Social Security or Medicare tax. Today, most working people actually pay more in this FICA tax (SS and Medicare) than they do in income tax, but there is very little that can be done to reduce this form of taxation.

III.      Some Common Tax Deductions for Individuals with Disabilities

          A.       Medical expenses#4

                     1.       A taxpayer can deduct certain medical and dental expenses for themselves, their spouse, and other dependents.

                     2.       The taxpayer can deduct only the part of their medical and dental expenses that is more than 7.5 percent of their AGI.

                     3.       The following illustrative list, based in part on a listing in IRS Publication 907, highlights some medical expenses an individual may have for special items, including AT. For more detailed information, see IRS Publication 502, Medical and Dental Expenses. Keep in mind that many of these listings are based on fairly old cases and revenue rulings that preceded some of the technology now available to individuals with disabilities.

                                a.       Artificial limbs, eyeglasses, and hearing aids.

                                b.       The part of the cost of Braille books and magazines that is more than the price of regular printed editions.

                                c.        Cost and repair of special telephone equipment for hearing-impaired persons, including but not limited to the TDD or other special telephone equipment for hearing-impaired persons, and costs for the acquisition and maintenance of other equipment that makes telecommunications accessible to persons with disabilities such as screen-reader software and braille or large-print output peripherals used for internet access computer by persons who are blind, or voice-dialers used for voice or data transmission via phone lines by persons with physical disabilities limiting their ability to manipulate ordinary telephone handsets.

                                d.       Cost of equipment that displays the audio part of television programs as subtitles for hearing impaired persons (i.e., closed captioning) or that provides output for verbal descriptions of visual action for persons with "visual impairments” (i.e., video description).

                                e.       Cost and maintenance of a wheelchair or scooter, van lift used for transportation of a person with a wheelchair, adaptive driving controls used by a person otherwise unable to operate a standard vehicle, or scooter or other motorized vehicle used for transportation or mobility by a person preventing from walking due to physical disability.

                                f.        Cost and care of a guide dog or other animal aiding a person who is blind or has a physical disability.

                                g.       A therapist or other person who gives treatment, prescribes therapeutic activities or otherwise provides therapeutic intervention, provided either that the individual is licensed by the state in which the services are provided or, that if the services in question are of a nature not requiring state licensure for their provision, the individual providing them has the requisite education and background normally expected of and consistent with the provision for a fee of such services.

                                h.       Tuition and fees (including expenses of travel to and from, if applicable) for a special school, provided such expenses are not paid by a student's local educational agency (LEA), if the main reason for using the school is its resources for relieving a mental or physical disability. This includes the costs of special education and related services within a mainstream school setting, if such expenses are incurred for the purpose of compensating for or overcoming the effects of a disability.

                                i.         Premiums for qualified long-term care insurance, up to certain amounts.

                                j.         Improvements to a home that do not increase its value if the main purpose is medical care, including making the home accessible so that a person with a physical disability can occupy or continue to reside in it. An example is constructing entrance or exit ramps for the purpose of accessibility, including but not limited to ramps or other improvements that comply with the provisions of the Americans with Disabilities Act Accessibility Guidelines (ADAAG). NOTE: Improvements made for medical purposes that do increase a home's value, if the main purpose is medical care, may be partly excluded as a medical expense. To the extent that the increase in value is not deductible, that increase will usually be added to the basis of the property so as to increase its adjusted basis for capital gains purposes if and when it is sold. See IRS Publication 502 for more information.

                     4.       Keep in mind that many of these items might be paid for or partially paid for by Medicaid, Medicare, or a private insurance plan.

                                a.       The part this is funded by a third-party insurance plan or other payer cannot be used as a tax deduction.

                                b.       Any amount paid by the taxpayer, for a co-payment or deductible can be deducted under the medical expense deductions.

          B.       Impairment-related work expenses (IRWEs)#5

                     1.       For those familiar with the Social Security and SSI work incentives, there is some similarity between IRWEs as defined by those programs and as defined by the IRS as a tax deduction. However, they are not precisely the same.

                     2.       If self employed, the IRWEs are reported as “business expenses” on the appropriate form (Schedule C, C-EZ, E, or F). If the taxpayer is an employee, they are reported on Form 2106 (Employee Business Expenses) or Form 2106-EZ (Unreimbursed Employee Business Expenses).

                                a.       An individual's IRWEs are not subject to the 2 percent of AGI limit that applies to other employee business expenses#6 Nor are they subject to the 7.5 percent threshold that applies to the medical expense deduction.

                                b.       However, IRWEs , like medical expenses, can only be used if the taxpayer itemizes deductions rather than using the standard deduction.

                     3.       The IRWE can apply to an individual with a physical or mental disability that functionally limits employment or substantially limits one or more major life activities (e.g., performing manual tasks, walking, speaking, breathing, learning, and working).

                                a.       But one's ability to claim IRWE's is not dependent on one's being so limited in a major life activity as to meet the test for being an individual with a disability under the ADA.

                                b.       Nor is any medical involvement or certification required, either as to diagnosis or prescription.

                     4.       A deductible IRWE can include ordinary and necessary (employee or self-employment) business expenses that are “necessary for you to be able to work” or “to do your work satisfactorily.” IRS Publication 17. The IRWE must be for goods and services not required or used, other than incidentally, in the taxpayer's personal activities, and not specifically covered under other income tax laws. Id.

                     5.       Some examples of acceptable IRWEs from IRS publications:

                                a.       Attendant care services at the place of work;

                                b.       For an individual who is blind, the cost of a reader “during your regular working hours at your place of work and outside your regular working hours away from your place of work,” so long as the reader's services are only for work-related reading. IRS Publication 17.

                                c.        Other expenses in connection with the place of work that are incurred to enable the individual to work.

                     6.       If an individual is disabled and has IRWEs that are necessary to get qualifying work-related education, he or she can deduct these expenses on Schedule A (Form 1040), line 27.

                                a.       Like other IRWEs, those incurred in order to obtain work-related education and training are not subject to the 2 percent of AGI limit.

                     7.       Other examples, not found in IRS publications, that appear to meet the IRWE criteria:

                                a.       The cost of a personal assistant or home care attendant at home to help the individual get ready for work, subject to the ability to separate the cost of those services from their cost on days when not going to work;

                                b.       The cost of a private van service (for a person in a wheelchair) to travel to and from work, to the extent that they exceed the costs the individual would have incurred for such transportation but for the need for the specialized van.

NOTE: Many of these expenses, like the lift-equipped van service, would also qualify for the medical deduction. Provided one can meet the 7.5% of AGI threshold for deducting medical expenses, that would probably be an easier and safer strategy.#7

IV.      Some Common Tax Credits Available to Persons with Disabilities

          A.       Child and dependent care credit

                     1.       If the taxpayer pays someone to care for either a dependent under age 13 or a spouse or dependent over that age who is not able to care for himself or herself, the taxpayer may be able to qualify for a credit of up to 35 percent of their expenses.#8

                     2.       The maximum credit amount is $2,400 for one qualifying dependent, or $4,800 for two or more qualifying dependents.

                     3.       The credit can be claimed on Form 1040 or 1040A. The credit is figured on Form 2441 (Form 1040) or Schedule 2 (Form 1040A).

                     4.       For more information, see the instructions for Form 1040, line 47 or Form 1040A, line 29. IRS Publication 503, Child and Dependent Care Expenses, contains more detailed information.

          B.       Credit for the elderly or the disabled

                     1.       A taxpayer can claim this credit if age 65 or older, or if under 65 and retired on permanent and total disability.

                     2.       The credit can be claimed on Form 1040 or 1040A. The credit can be figured on Schedule R (1040) or on Schedule 3 (Form 1040A).

                     3.       For more information on the credit, see the instructions for Form 1040, line 48 or Form 1040A, line 30. IRS Publication 524, Credit for the Elderly or the Disabled, contains more detailed information.

          C.       The Earned Income Tax Credit (EITC) #9

                     1.       The EITC is potentially available for all taxpayers, with or without disabilities, who meet the criteria for the credit. The value of the credit can be very significant and be of great assistance in funding disability-related expenses.

                     2.       Who qualifies? What is the EITC worth?

                                a.       Workers with one qualifying child and adjusted gross income (AGI) of less than $30,338 (or $31,338 for married workers) in tax year 2004 can get an EITC, ranging from $3 to $2,604.

                                b.       Workers with more than one qualifying child and AGI of less than $34,458 (or $35,458 for married workers) in 2004 can get an EITC, ranging from $1 to $4,300.

                                c.        Even workers, between the ages of 25 and 64, who had no qualifying child and AGI below $11,490 (or $12,490 for married workers) in tax year 2004 can get an EITC, ranging from $2 to $390.

                                d.       NOTE: There are a number of rules for determining who can claim the credit and the definition of a qualifying child, for example.

                                           (1)      Although the definition of qualifying child is limited by age, there is no such age limitation in the case of a child who is totally and permanently disabled.#10

                                           (2)      Two good resources that cover these rules more extensively are: Lopez-Soto, E. & Sheldon, J., The Federal Earned Income Tax Credit: A Work Incentive That Puts More Money in a Paycheck and Saves on Taxes (Cornell University's Employment and Disability Institute 2005), available at www.ilr.cornell.edu/edi/publications/PPBriefs/PP_21.pdf; The Federal Earned Income Tax Credit (The Benefits Planner Newsletter, Winter 2003-04), available at http://nls.org/planner/winter03.htm or http://nls.org/pdf/winter-03-04.pdf.

                     3.       Advance payment of the EITC

                                a.       If an individual or couple, with a qualifying child, expects to be eligible for the tax credit at the end of the year, they might be eligible to get part of their EITC in advance as an addition to their paycheck.

                                b.       The individual must expect that both earned income and AGI will be less than $31,000 in tax year 2005 ($33,000 if married and filing jointly).

                                c.        Assuming that all of the other criteria are met, the individual will qualify for an advance payment not to exceed $1,597 during the 2005 tax year.

                     4.       Example of how the EITC can work:

A married couple has two children, ages 11 and 14 (i.e., “qualifying children” under the EITC provisions). For tax year 2004, they have a combined AGI of $29,011 and would ordinarily owe $691 in taxes.

                                a.       $230 was withheld from their paychecks, meaning they would owe the IRS $461 upon filing a tax return.

                                b.       Based on this level of income and with two qualifying children, the couple would be eligible for an EITC of $1,355 for tax year 2004.

                                c.        If they qualify for an EITC of $1,355, they will not owe any taxes and will qualify for a refund of $894 (i.e., the $1,355 credit minus the $461 they owe in taxes).

                                d.       Because the EITC can result in a refund when the amount of the credit exceeds the tax liability, it is often described as “a refundable credit.”

                                e.       Note: If the $1,355 had been a deduction, rather than a credit, it might only have reduced the taxes owed by $135 (if we assume a 10 percent tax bracket).

V.       Some Common Pre-Tax Exclusions From Income

          A.       Dependent care benefits

                     1.       A taxpayer can exclude from income benefits provided under an employer's qualified dependent care assistance plan.

                     2.       Up to $5,000 can be excluded under this plan.

                     3.       The care must be provided to a dependent under the age or 13, or to a spouse or dependent, over that age, who is not able to care for himself or herself.

          B.       The Flexible Spending Account

                     1.       These accounts, known as “flex plans,” “cafeteria plans,” or “125 plans,” are authorized by section 125 of the Internal Revenue Code. See IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans.

                     2.       If an employer offers this alternative (or fringe benefit) to its employees, the employee may designate a certain amount of pay that is then set aside, pre-tax, to cover items or expenses not otherwise covered by health insurance.

                                a.       This can be used to cover traditional medical costs such as health insurance premiums, co-payments on doctor visits and prescription drug purchases, AT-related purchases, and services not covered in the health insurance plan.

                                b.       It can also be used to cover expenses that have nothing to do with medical needs, such as dependent child care, adoption expenses, and parking fees.

                     3.       The following is a representative list of disability-related expenses, including AT-related expenses, that can be deducted if paid by the employee. This list was taken from an existing FSA plan#11 and should not be viewed as in any way limiting the possibilities for what can be deducted through an FSA plan.

                                a.       Braille-books & magazines

                                b.       Chiropractors

                                c.        Co-insurance amount you pay

                                d.       Co-pay amount you pay

                                e.       Contact lenses & eyeglasses plus eye examination

                                f.        Cosmetic surgery medically necessary and recommended by Physician (restricted by IRS regulations)

                                g.       Cost of operations and related treatments

                                h.       Crutches

                                i.         Deductible medical coverage amounts you pay

                                j.         Dental fees

                                k.        Hearing devices & batteries

                                l.         Home improvements motivated by medical considerations

                                m.      Massage therapy

                                n.       Mentally handicapped persons' cost of special home improvements

                                o.       Orthopedic shoes

                                p.       Physician recommended swimming pool or spa equipment costs (is restricted by IRS regulations)

                                q.       Prescription drugs

                                r.        Seeing eye dog and maintenance

                                s.        Special school for a person with a disability, special education for the blind

                                t.        Telephone, special for deaf

                                u.       Television audio display equipment for deaf

                                v.        Transportation expenses primarily in the rendering of medical services

                                w.       Wheelchair

                     4.       Benefits to individuals who use the flexible spending plan.

                                a.       Through tax savings, an indirect subsidy toward the cost of necessary medical expenses, including expenses for AT devices. The actual tax savings will depend on the tax payer's tax bracket (or what is known as the marginal tax rate, i.e., the rate on the last dollar earned). But whatever the tax benefit, there is no worry about thresholds or about being able to itemize when you use the FSA to pay medical expenses.

                                b.       By reducing countable income for IRS purposes, this will also work to the taxpayer's advantage with many needs-based programs that use taxable income as their yardstick for eligibility.

                                c.        Example #1: Darlene Green resides with her son Jason, age 13. Jason has cerebral palsy and uses a power wheelchair that is six years old and needs to be replaced. Darlene is employed.

Jason was getting a small SSI check of under $30 and automatic Medicaid.#12 However, Jason lost his SSI check and automatic Medicaid when his mother received a $3,000 per year raise, effective January 1, 2005.

                                           (3)      So, the Green family will benefit in three ways: reduced tax liability, retention of SSI or a higher SSI payment level, and Medicaid eligibility (to pay for a range of items, including a new power wheelchair).#13

                                d.       Example # 2: Candida Perez is married to Juan who recently became disabled in a car accident. Juan is not eligible for SSDI benefits because he did not have a sufficient work history. He applied for SSI (his state would pay the 2005 federal benefit rate of $579 with no state supplement). He was denied SSI because of his wife's income.

In Juan's situation, the SSI break-even amount for Candidate's monthly gross earnings (the amount at which the deemed income would reduce his potential SSI check to $0) would be $1,823 per month. Candida earns just more than that amount, $1,853 gross per month and may be up for a promotion next year.

What can Candida do? After consulting her flex plan administrator, she starts a flexible spending account. In it, she has $300 per month deducted from her monthly paycheck: $150 for her share of health insurance, $100 for parking, and $50 to cover a range of co-payments and uninsured medical expenses. How has the flex plan helped Candida and Juan?

                                           (1)      By reducing the family's taxable income by $300 per month ($3,600 per year), there will be a tax savings.

                                           (2)      By reducing Candida's monthly gross income from $1,853 to $1,553, Juan goes from not being eligible for SSI to eligibility for an SSI check of about $130 per month.

                                           (3)      Juan is also now eligible for automatic Medicaid in his state. Medicaid will pay for prescription co-pays (his state covers that optional service), a power wheelchair he desperately needs, and any other services not covered by the private insurance plan.

                                           (4)      Because he is now an SSI recipient, Juan will also be eligible for any needs-based assistance from his state vocational rehabilitation (VR) agency without regard to the income of his spouse. The VR agency will pay for a number of expenses to allow Juan to pursue a vocational goal: tuition and other college expenses; a ramp to allow Juan to get into and out of his home; and vehicle modifications if he can come up with the money to purchase a van.

                     5.       The FSA “use it or lose it” rule

                                a.       If the individual contributes dollars to a reimbursement account and does not use all the monies deposited, the individual will lose any remaining balance at the end of the plan year.

                                b.       For this reason, the taxpayer needs to plan carefully and only contribute those dollars he or she is confident they will use for qualified expenses during the plan year.

VI.      Tax Incentives for Businesses

Since these incentives are a way for either the employee or the customer with a disability to receive the benefit of disability-related goods and services, including AT, it important for the potential employee or customer, as well as the business owner to be aware of these provisions.

          A.       Deduction for costs of removing barriers to the disabled and elderly#14

                     1.       A business can take this deduction for making a facility or public transportation vehicle more accessible to and usable by persons who are disabled or elderly. See chapter 8 in IRS Publication 535, Business Expenses.

                     2.       This applies to businesses of any size.

                     3.       The deduction allowed is up to $15,000 per year.

                     4.       While this expense might also be allowed as a business-related deduction, as a business-related deduction it would likely be a capital expense that would need to be amortized over a number of years. Converting the item from a capital expense deductible over a number of years into a current expense deductible all in the year incurred is advantageous to most taxpayers. We refer to this as accelerating the tax benefit.

          B.       Disabled access credit (DAC)#15

                     1.       This credit is commonly called the small business accommodation credit, and what makes it particularly attractive to small businesses are two things.

                                a.       First, its availability turns ordinary deductions into credits.

                                b.       Second, in those cases where a small business's tax is not large enough to absorb the entire amount of the credit in the year earned, the unused portion may be carried forward to future years when income rises and is sufficient to absorb it.#16

                     2.       The expense must be to enable the eligible small business (i.e., with 30 or fewer full-time employees, or with $1 million or less in gross receipts the preceding year) to comply with the Americans with Disabilities Act.

                     3.       The DAC allows a credit for 50 percent of the first $10,000 per year of eligible access expenditures, above a $250 threshold.

                     4.       Proving that an expense was incurred for accommodation or accessibility reasons has proved more difficult than expected. In AT cases, the IRS has been requiring that small businesses show that it would have been unable to serve customers or patients with disabilities if the equipment had not been purchased.#17 This interpretation is not supported by the legislative history or the language of the section.

                     5.       See the instructions for Form 8826, Disabled Access Credit, for more information.

          C.       Work opportunity credit #18

                     1.       This credit provides businesses of any size with an incentive to hire individuals from targeted groups that have a particularly high unemployment rate or other special employment needs.

                     2.       For new hires from a targeted group, this credit allows 40 percent of first-year wages, up to a maximum of $6,000, to be treated as a credit rather than an ordinary deduction. This means a maximum per worker credit of $2,400.

                     3.       Targeted groups for persons with disabilities:

                                a.       Individuals who have received Supplemental Security Income (SSI) within 90 days preceding the hire are a targeted group.

                                b.       Another targeted group consists of state VR agency referrals.

                                           (1)      These are individuals who have successfully completed activities under an individualized plan for employment (IPE) or other approved plan.

                                           (2)      Notwithstanding the program completion requirement, state VR agencies appear to have some discretion in the criteria they use for determining who to certify.

                     4.       For more information, see the instructions for Form 5884, Work Opportunity Credit.

1 While beyond the scope of this handout, you may want to encourage your client\ to look into eligibility for the Medicaid buy-in (now available in 27 states), section\ 1619(b), or a Medicaid home and community-based waiver. Each of these programs\ are potentially available for Medicaid eligibility at higher levels of income.

2 IRC §1, 26 U.S.C. §1.

3 IRC § 162, 26 U.S.C. § 162; Form 1040, line 22.

4 Internal Revenue Code (IRC) § 212, 26 U.S.C. § 212.

5 IRC § 67(d), 26 U.S.C. § 67(d)..

6 IRC § 67(b)(6) & (7), 26 U.S.C. § 67(b)(6) & (7).

7 We caution the reader that the IRS has traditionally held that there is a strict ban\ on deducting expenses for the traditional commute from home to work.

8 IRC § 21, 26 U.S.C. § 21.

9 IRC § 32, 26 U.S.C. § 32.

10 IRC § 32, 26 U.S.C. § 32.

11 See the website of P&A Administrative Services (no connection to Protection\ and Advocacy agencies), the administrator of the flexible spending account for\ Neighborhood Legal Services, the co-author's employer. See http://www.padmin.com/forms/Flex%20Brochure.pdf.

12 In 39 states, the Northern Mariana Islands, and the District of Columbia, an SSI\ recipient automatically qualifies for Medicaid.

13 In a real case, we would want to make sure that Darlene looks first to the\ private insurance plan to fund the wheelchair and, secondarily, to Medicaid. And, if\ both the private insurance plan and Medicaid will not pay with the replacement chair,\ Darlene should consider increasing her FSA contributions to include funds for the chair\ only as a last resort.

14 IRC § 190, 26 U.S.C. § 190.

15 RC § 44, 26 U.S.C. § 44.

16 IRC § 38, 26 U.S.C. § 38.

17 Compare, Hubbard v. Comm\'r. of Internal Revenue, T.C. Memo 2003-245,\ 2003 Tax Ct. Memo LEXIS 243 (2003), with Fan v. Comm\'r. of Internal Revenue, 117\ T.C. 32, 2001 U.S. Tax Ct. LEXIS 34 2001)).

18 IRC § 51, 26 U.S.C. § 51.

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