How do I get "certified" as having a disability?
June 24, 2014 5:51 PM   Subscribe

I'm better now, but I feel that I was disabled before and want to re-file my taxes. Do I need to prove this, and how does that work? What does it take to prove disability, especially retroactively?

In 2008 I was diagnosed with moderate to severe depression and began treatment. In 2011, I basically had a nervous breakdown and lost my high stress job in the tech industry. At that point I crawled into a hole and watched the world go by. I depleted my savings and began spending down my IRA, paying severe early withdrawal penalties each year. I probably should have claimed disability to avoid paying those penalties, but I barely had my shit together enough to file, much less figure out how a disability claim worked.

Well, I think I've pulled my shit back together again, and I'm searching for a job. The IRA is mostly gone. Now I'd like to go back and re-file my taxes, and claim disability for those years while I was spending down my IRA, to try and recover those early withdrawal penalties. I would also like to find out if there are any disability programs that would let me collect something like unemployment while I'm searching for a job. I haven't worked in 3 years, so normal unemployment is not available to me.

How does one go about getting "certified" for a disability? Is this something I just arbitrarily claim when I re-file my taxes, and wait for the government to challenge? What do I do when they do challenge? And are there "disability" programs that would let me file for some type of unemployment coverage while I search for work? (I live in Washington State, if anybody has local knowledge).
posted by anonymous to Work & Money (6 answers total) 4 users marked this as a favorite
Applying for disability usually takes years* (depends on the state and their backlog) and as far as I know it is not retroactive. You apply through Social Security for supplemental security income. It's a rigorous process. You might want to hire a disability lawyer if you do this. The percentage of successful applications is much higher if you have help with the application and hearings processes.

*The website says it takes 3-5 months. That is laughable. It usually takes about 2 years. I know someone who works on SSI benefit decisions and it is not a fast process by any means.

Check here to see if you might be eligible before going any further. My gut says you aren't but I am not a lawyer and this is not legal advice.
posted by sockermom at 6:13 PM on June 24, 2014

My apologies, my answer above contains a slight bit of misinformation. Disability in some cases may be retroactive but only up to a year before your application date.

Section 12.04 of the Disability Evaluation document lists the conditions that you must meet to be considered disabled by an affective disorder in the eyes of the federal government.
posted by sockermom at 6:32 PM on June 24, 2014

That's Federal disability benefits, SSDI.

Your 2008 employer may have contributed to a private short-term/long-term disability insurance policy. All I know about them is, IFF you successfully claim, they then require you to file for SSDI to recoup their money.

There are almost no tax benefits available to people on SSDI: our assistive technology MAY qualify as a medical purchase, useful for itemization (but not if it's a hearing aid, or glasses). If you're blind, there's an extra personal exemption. Very haphazard and requires you to be earning enough to itemize.
posted by Jesse the K at 6:46 PM on June 24, 2014 [1 favorite]

The standard for avoiding the 10% tax penalty for both traditional and Roth IRAs, per IRS publication 590, is "totally and permanently disabled". I don't know anything about retroactively applying for disability payments, but I don't think that part is likely to be a viable plan for you.
posted by Sequence at 7:19 PM on June 24, 2014

Do you have documentation of your medical expenses for the years in which you want to re-file and recoup the early withdrawal penalties? If you don't, then I don't think that you have much recourse. If you do:

When you filed your taxes, did you use the standard deduction or were you itemizing? If you itemized, you can deduct un-reimbursed medication expenses in excess of 10% of your gross income as of 2013, 7.5% of your gross income in previous years. You'll want to look at the instructions for Form 1040, Schedule A for specifics. If you used the standard deduction, there's not really a way for you to claim medical expenses, and there's no other applicable deduction that would change based on your dis/ability, in which case there's no reason to refile.

Now I'd like to go back and re-file my taxes, and claim disability for those years while I was spending down my IRA, to try and recover those early withdrawal penalties.

Similar to the tax deduction, you can withdraw to pay for medical expenses in excess of 10% of your gross income penalty-free.

You can also get a penalty-free early withdrawal if you are so ill that it can be expected to result in death or permanent disability. If you think that your doctor(s) would provide documentation to support your claim that that applies to you, then you should speak to her about it. However, based on what you've said here, I don't think that it does apply.

I would also like to find out if there are any disability programs that would let me collect something like unemployment while I'm searching for a job.

Not that I know of. If you're a childless adult, then you're almost certainly ineligible for cash aid, but you may be able to get means-tested (meaning, you have an income and/or asset amount below a certain limit) vouchers for things like food (through SNAP) and possibly rent (Section 8), and though open-enrollment has passed, you may be able to still get on Medicaid (do you have insurance now?). The easiest to get is probably Medicaid, SNAP is more difficult, and rent vouchers are likely the most difficult.

The long and short of it is, there's a fundamental problem with your idea of using disability payments as ad hoc unemployment benefits: arguing on the one hand that you're so disabled that you need public support is going to seem to contradict your argument that, on the other hand, you're currently employable and actively searching for employment. Many disabled people *do* work, but the point of public disability programs is to support people who can't work or who are extremely disadvantaged on the labor market because of their disability/ies. Also, the idea of public welfare programs generally in the US is to support people at the absolute minimum level of subsistence, which means giving people only enough assistance so that they aren't so poor that they literally die. It sounds like you're imagining that there are support programs for disabled people that go beyond that, but there really aren't, because the public welfare philosophy in the US is built around making sure people are above an absolute (and very low) measure of poverty and leaving the rest up to private enterprise (and assistance through the tax system, but it sounds like you're already tapping that vein). In pragmatic terms, I would advise to be thinking more in terms of means-tested programs rather than disability if you're close to running out of money.
posted by rue72 at 7:54 PM on June 24, 2014 [6 favorites]

Update from the anonymous OP:
Excellent feedback in all answers. Looks like I'm SOL. It was a long-shot at best. However, I am once again astounded at the knowledge of the Hivemind. Thank you all for your help!
posted by LobsterMitten at 12:05 PM on June 25, 2014

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