Republican tax plans have some people with disabilities worried. For parents and grandparents of those people with disabilities, it suggests that a special needs trust is more important than ever.
The ramifications of the new Republican tax reform for individual Americans are still being assessed.
Not only will those with disabilities enjoy the standard deduction doubling under the Republican plan, but their taxes might decrease even further due to another provision. The plan includes a provision to lower the itemized deduction threshold for health care expenses in tax years 2017 and 2018. The new tax law lowers the deductibility threshold from 10% to 7.5% of adjusted gross income.
Not until 2019 will the threshold increase return back to 10% where it was pegged in 2016.
Accordingly, the fears expressed by The Hill in "Restructured tax code would unduly burden people with disabilities" did not come to pass.
There is something parents and grandparents of the disabled, as well as the disabled themselves, can do and that is create a special needs trust. These trusts do not ease anyone's tax burden but do allow people with special needs to have more income to help cover any increased taxes.
If you would like to learn more about special needs trusts, then talk to an estate planning attorney for the details about setting one up.
The process is complicated and needs to be done in a particular way in order to work but an experienced attorney can help you with that.
Reference: The Hill (Nov. 24, 2017) "Restructured tax code would unduly burden people with disabilities."