Many of the items necessary for medical use, such as mobility equipment, are eligible for tax deductions to help offset out-of-pocket costs. For those in the market for personal mobility vehicles, does the disability tax deduction apply? In short, vehicles are unfortunately not fully tax deductible. However, in Missouri and Illinois, buyers can receive lower sales tax, and conversions or certain conversion features are actually eligible for a tax deduction. Read on to discover how to qualify and save the most on your accessible vehicle purchase.
Qualifying for the Disability Tax Deduction
First and foremost, in order to receive a federal disability tax deduction, you must identify what qualifies. The cost difference between an accessible vehicle versus the same model that has not been converted can be submitted as a medical expense. When you are using the vehicle for medical reasons, such as driving to appointments and long-distance trips to specialists, the costs of your gas and oil may also fall under medical expenses, meaning they would be tax deductible, as well. When submitting your yearly taxes, if you are unsure of your actual expenses but know your miles driven, you can submit the current standard medical mileage rate from the Internal Revenue Service (IRS): miles driven between January 1, 2022 – June 30, 2022, are 18 cents per mile, and July 1, 2022 – December 31, 2022, are 22 cents per mile.
What Transportation Costs Do Not Qualify for a Tax Deduction?
Although you are using the vehicle for medical transportation, there are a few things that do not qualify for disability tax deductions. For starters, any depreciation, insurance coverage, general repair or maintenance does not qualify. The mileage you put on the vehicle by simply going to and from work, personal travel, or general health improvement travel, as well as any costs of operating a specially equipped vehicle that is not used for medical reasons would not qualify as medical expenses. If you’re unsure of what qualifies and what may not, be sure to discuss your eligibility with a knowledgeable tax professional when working on your annual taxes.
Qualifying for the Disability Tax Credit
Not to be confused with the disability tax deduction, your vehicle can qualify for a disability tax credit – but who qualifies? If the wheelchair-accessible vehicle is for your own use, of course, you would qualify for the tax credit. If the vehicle is utilized by a spouse or dependent, the owner of the vehicle would qualify for the tax credit. There are some qualifying terms to note with these, though.
To be considered a qualifying child, you must be:
- A son, daughter, stepchild, foster child, brother, sister, step-sibling, half-sibling, or descendent of one (such as grandchild, niece or nephew)
- Under the age of 19 within the tax year and younger than you
- Under the age of 24 within the tax year, a full-time student, and younger than you
- Any age and considered permanently disabled
- Must have lived with you for over half the tax year and did not provide over half of his or her own support throughout the tax year
A qualifying relative must be:
- Your sibling, half-sibling, or a descendant (such as grandchild, niece or nephew)
- A parent, ancestor, or sibling of them
- A step-sibling, step-parent, or in-law
- Any person other than your spouse who lived with you all year as a household member pending the relationship did not violate local law
Qualifying adopted children:
- If the child lived with you during the tax year and you are a U.S. citizen or national, the child does not need to be a citizen or resident of the U.S., Canada, or Mexico to qualify as a dependent
If you have questions about these qualifications during or before your vehicle purchase process, you can reach out to your financial advisor, or, if you are at an experienced dealership, you can discuss these with your salesperson or their financial office.
Tax Deduction Limits For Wheelchair Vans
It’s no question that any tax credit or deduction is helpful, but there are limits to how much you can receive. According to the IRS, “only the amount of your total medical expenses that exceed 7.5% of your adjusted gross income” may be deductible. This allowed deduction amount can be figured using Schedule A (Form 1040) for the taxable year.
Because the total medical expenses include any payments toward the diagnosis, cure, mitigation, treatment, and more, the cost of your wheelchair-accessible van will only be a small portion of the tax deduction.
Purchase a Wheelchair Accessible Vehicle from a Dealership Experienced in Disability Tax Deductions
Vehicle purchases in general can be confusing when it comes to figuring taxes and deductions, but when you are purchasing an accessible van that qualifies as a medical expense, there’s a lot to understand to ensure you receive the savings you deserve. By purchasing from an experienced dealership, such as Southern Bus and Mobility, you can rest assured you’ll get the information you need regarding the tax deductions you qualify for in your state, as well as more accurate cost representation of the vehicle’s specific conversions and features.
As an NMEDA QAP Certified dealer, we are here to help make your buying process easy to understand and ensure the wheelchair-accessible van you purchase is high-quality.