What Are Impairment-Related Work Expenses?

Impairment-Related Work Expenses (IRWE) represent specific costs incurred by individuals with disabilities that enable them to perform their work. These expenses may offer a tax deduction, helping to offset the financial burden associated with working while managing a disability. This article clarifies what these expenses are and how they relate to federal tax filing.

What Qualifies as an Impairment-Related Work Expense

The Internal Revenue Service (IRS) defines impairment-related work expenses as the allowable costs incurred by individuals with physical or mental disabilities for attendant care and other workplace expenses that enable them to work. These expenses must be “ordinary and necessary” for the individual to perform their work satisfactorily. An ordinary expense is common and accepted in your trade or business, while a necessary expense is helpful and appropriate for your trade or business.

Qualifying expenses are varied and directly linked to enabling work despite an impairment. This includes attendant care services, such as a reader for a visually impaired individual or a personal assistant who helps with work-related functions. Specialized equipment also qualifies, such as a TTY device, a specialized braille printer, or modifications to a computer workstation, including adaptive software. Transportation costs directly related to the disability and work, such as accessible transportation or vehicle modifications for work purposes, are also deductible. Costs for services that help an individual function in their workplace, like a sign language interpreter for work meetings, are included.

These expenses must be for goods and services not required or used, other than incidentally, in personal activities. For instance, general medical expenses not directly tied to enabling work, or purely personal expenses, do not qualify. However, some items, like a wheelchair, may count as an IRWE even if also used for daily living, as long as they are needed for work. Expenses that are specifically covered under other tax laws, like standard medical deductions, are excluded from IRWE.

Who Can Claim These Expenses

Individuals with a qualifying disability who are employed can claim these expenses. The IRS defines a person with a disability, for the purpose of this deduction, as someone with a physical or mental disability that functionally limits their employment, or one that substantially limits a major life activity such as walking, speaking, breathing, learning, or working.

The expenses must be paid by the individual seeking the deduction and not reimbursed by an employer, insurance, or any other source. If any part of the expense is reimbursed, only the unreimbursed portion can be considered for the deduction. The expenses must also be necessary for the individual to perform their work duties. While this deduction primarily applies to employees, self-employed individuals report these expenses as standard business expenses on their Schedule C, E, or F.

Keeping Records and Calculating the Deduction

Meticulous record-keeping is important for substantiating any claimed impairment-related work expenses. Taxpayers must maintain detailed records that prove the expense and its direct connection to their work and disability. This documentation serves as evidence if the IRS reviews the deduction.

Records to keep include original receipts, invoices from service providers, canceled checks, and bank statements that show the amount paid, the date of payment, and a clear description of the goods or services. It is also advisable to keep detailed logs or written explanations that explicitly link each expense to the individual’s work and their disability. Organizing these records by category or date can simplify the process of calculating the total deductible amount.

How to Report the Deduction on Your Tax Return

Impairment-related work expenses are reported as an itemized deduction on Schedule A (Form 1040), Itemized Deductions. Specifically, these expenses are entered on Form 2106, Employee Business Expenses, and then transferred to Schedule A. The amount is entered on line 16 of Schedule A, and the type and amount of the expense should be identified next to that line.

These expenses are not subject to the 2% adjusted gross income (AGI) limitation that applied to many other miscellaneous itemized deductions. The full qualifying amount, after any reimbursements, remains deductible for eligible individuals who itemize their deductions.