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Families With Disabled Children May Qualify for Earned Income Tax Credit

Tips to keep in mind even after the April 15th tax deadline

Families With Disabled Children May Qualify for Earned Income Tax Credit

Bernard A. Krooks, Certified Elder Law Attorney


Certain disability retirement benefits qualify as earned income that will allow parents to claim the Earned Income Tax Credit (EITC). The EITC is a refundable federal income tax credit for low to moderate income working individuals and families.


To qualify, the child must have a valid Social Security number and must pass age, relationship, residency and joint return tests. The child must be the son, daughter, adopted child, stepchild, foster child, sibling, stepsibling, half sibling (or one of their descendants) of the individual filing the credit.


Guardians may claim a relative of any age as long as he or she is totally or permanently disabled. Permanent disability status is possible only if

1.) the child cannot partake in a substantial gainful activity due to his or her disability, and

2.) a doctor has determined that the condition will last for more than one year or could lead to death. A letter from a physician, health care provider or social service program is necessary to prove permanent disability status.


Sheltered employment, such as work done in a sheltered workshop, hospital or similar institution, homebound program or Department of Veterans Affairs sponsored home programs are not considered to be substantial gainful activities. Disabled individuals who work in these places may still be eligible for the EITC.

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Social Security Disability Insurance, SSI and military disability pensions are not considered earned income and cannot be used to claim the EITC. Disability insurance payments are also not considered earned income.


The IRS considers disability retirement benefits as earned income until the collector reaches the earliest age he or she could have received a pension if he or she did not have the disability, at which point the benefits are considered to be a pension.


To claim the EITC, parents must file a tax return for the child.


Contact an experienced New York special needs planning attorney to learn more about the Earned Income Tax Credit.



Bernard Krooks is a New York Elder Law and New York Estate Planning lawyer with offices in White Plains; Fishkill; and New York, New York.