Have a Tax Question? Ask a Tax Expert
That is a good news as she is awarded.
From tax prospective - the award is received in 2014 - and we need to include the full award amount into her 2014 income.
HOWEVER - because that is award for prior years - the taxable amount may be determined separately for each year starting 2006 and based on income for each of these years separately.
However - the taxable amount (if any) is included in 2014 tax return based on when income was received..
Regarding your tax credits for previous years - yes - if you were eligible for such credits - you may go back and file - but you will be only issued a refund for last three years. That limit is due to the statute of limitation.
Let me know if you need help in determination of your eligibility.
When you applied to disability - and believe she is disabled - most likely you had the statement from the doctor regarding her disability correct?That statement is accepted by the IRS to claim disability status for tax purposes.There is no need for the SSA determination or court award to be considered disabled for tax purposes.
According to IRS regulations - a person is permanently and totally disabled if both 1 and 2 below apply.
1. He or she cannot engage in any substantial gainful activity because of a physical or mental condition.2. A qualified physician determines that the condition has lasted or can be expected to last continuously for at least a year or can be expected to result in death.
As we see - there is NO requirements for the SSA determination or court award - you would ONLY need a qualified physician determination.
An example of the physician statement may be found on the last page in following publication
But that statement is NOT sent to the IRS with your tax return. You just keep it for your record and will provide if audited and the IRS agent would question your position.
Let me know if you need any help with reporting.
I am here to help you with all tax related issues.