J.K. Lasser's Small Business Taxes 2013: Your Complete Guide to a Better Bottom Line

Expenses of Disabled Persons

Individuals with handicaps or disabilities may incur certain expenses to enable them to work. For example, a blind individual may hire a reader. In general, the cost of work-related expenses of disabled persons is deductible.

Sometimes it may be difficult to decide whether the expense is a personal medical expense that is subject to a 7.5%-of-adjusted-gross-income floor or a business expense. If the expense is required for the individual to perform his or her job and the goods or services are not used primarily for personal purposes, the expense can be treated as a business expense. For example, attendant care services at the office generally are treated as business expenses. You must show a physical or mental handicap that results in a functional limitation to employment, such as blindness or deafness.

Work-related business expenses of handicapped persons are itemized deductions that are not subject to the 2%-of-AGI rule floor. If the handicapped person is self-employed, the expenses are deductible as any other business expense on Schedule C.

If you, as an employer, incur special costs because of compliance with the Americans with Disabilities Act, you may deduct these costs as ordinary and necessary business expenses. If they are capital in nature, you may be able to claim a special deduction or credit, as explained in Chapter 10.