Table of Contents
All income is taxable unless it is specifically excluded by law. The following discussions highlight some income items (both taxable and nontaxable) that are of particular interest to people with disabilities and those who care for people with disabilities.
Dependent care benefits include:
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Amounts your employer paid directly to either you or your care provider for the care of your qualifying person while you work,
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The fair market value of care in a daycare facility provided or sponsored by your employer, and
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Pre-tax contributions you made under a dependent care flexible spending arrangement.
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The total amount of dependent care benefits you received during the year,
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The total amount of qualified expenses you incurred during the year,
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Your earned income,
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Your spouse's earned income, or
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$5,000 ($2,500 if married filing separately).
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A qualifying child who is under age 13 whom you can claim as a dependent. If the child turned 13 during the year, the child is a qualifying person for the part of the year he or she was under age 13.
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Your disabled spouse who is not physically or mentally able to care for himself or herself.
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Any disabled person who is not physically or mentally able to care for himself or herself whom you can claim as a dependent (or could claim as a dependent except that the person had gross income of $3,500 or more or filed a joint return).
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Any disabled person who is not physically or mentally able to care for himself or herself whom you could claim as a dependent except that you (or your spouse if filing jointly), could be claimed as a dependent on another taxpayer's 2008 return.
For information about excluding benefits on Form 1040, see Form 2441, Child and Dependent Care Expenses, and its instructions. For information about excluding benefits on Form 1040A, see Schedule 2 (Form 1040A), Child and Dependent Care Expenses for Form 1040A Filers.
If you received social security or equivalent tier 1 railroad retirement benefits during the year, part of the amount you received may be taxable.
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$25,000 if you are single, head of household, or qualifying widow(er),
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$25,000 if you are married filing separately and lived apart from your spouse for all of the year,
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$32,000 if you are married filing jointly, or
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$-0- if you are married filing separately and lived with your spouse at any time during the year.
If you retired on disability, you must include in income any disability pension you receive under a plan that is paid for by your employer. You must report your taxable disability payments as wages on line 7 of Form 1040 or Form 1040A until you reach minimum retirement age. Minimum retirement age generally is the age at which you can first receive a pension or annuity if you are not disabled.
You may be entitled to a tax credit if you were permanently and totally disabled when you retired. For information on this credit, see Publication 524, Credit for the Elderly or the Disabled.Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension or annuity. Report the payments on lines 16a and 16b of Form 1040 or on lines 12a and 12b of Form 1040A. For more information on pensions and annuities, see Publication 575.
See Publication 525, Taxable and Nontaxable Income, for more information.
Generally, you must report disability pensions as income, but do not include certain military and government disability pensions. For information about military and government disability pensions, see Publication 525.
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Education, training, and subsistence allowances,
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Disability compensation and pension payments for disabilities paid either to veterans or their families,
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Grants for homes designed for wheelchair living,
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Grants for motor vehicles for veterans who lost their sight or the use of their limbs,
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Veterans' insurance proceeds and dividends paid either to veterans or their beneficiaries, including the proceeds of a veteran's endowment policy paid before death,
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Interest on insurance dividends left on deposit with the VA,
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Benefits under a dependent-care assistance program, or
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The death gratuity paid to a survivor of a member of the Armed Forces who died after September 10, 2001.
You may receive other payments that are related to your disability. The following payments are not taxable.
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Benefit payments from a public welfare fund, such as payments due to blindness.
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Workers' compensation for an occupational sickness or injury if paid under a workers' compensation act or similar law.
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Compensatory (but not punitive) damages for physical injury or physical sickness.
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Disability benefits under a “no-fault” car insurance policy for loss of income or earning capacity as a result of injuries.
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Compensation for permanent loss or loss of use of a part or function of your body, or for your permanent disfigurement.
Long-term care insurance contracts generally are treated as accident and health insurance contracts. Amounts you receive from them (other than policyholder dividends or premium refunds) generally are excludable from income as amounts received for personal injury or sickness. More detailed information can be found in Publication 525.
You can exclude from income accelerated death benefits you receive on the life of an insured individual if certain requirements are met. Accelerated death benefits are amounts received under a life insurance contract before the death of the insured. These benefits also include amounts received on the sale or assignment of the contract to a viatical settlement provider. This exclusion applies only if the insured was a terminally ill individual or a chronically ill individual. For more information, see Publication 525.
If you file Form 1040, you generally can either claim the standard deduction or itemize your deductions. You must use Schedule A (Form 1040) to itemize your deductions. See your form instructions for information on the standard deduction and the deductions you can itemize. The following discussions highlight some itemized deductions that are of particular interest to persons with disabilities.
When figuring your deduction for medical expenses, you can generally include medical and dental expenses you pay for yourself, your spouse, and your dependents.
Medical expenses are the cost of diagnosis, cure, mitigation, treatment, or prevention of disease and the costs for treatments affecting any part or function of the body. They include the costs of equipment, supplies, diagnostic devices, and transportation for needed medical care and payments for medical insurance.
You can deduct only the amount of your medical and dental expenses that is more than 7.5% of your adjusted gross income shown on Form 1040, line 38.
The following list highlights some of the medical expenses you can include in figuring your medical expense deduction. For more detailed information, see Publication 502, Medical and Dental Expenses.
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Artificial limbs, contact lenses, eyeglasses, and hearing aids.
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The part of the cost of Braille books and magazines that is more than the price of regular printed editions.
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Cost and repair of special telephone equipment for hearing-impaired persons.
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Cost of equipment that displays the audio part of television programs as subtitles for hearing-impaired persons.
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Cost and maintenance of a wheelchair or autoette.
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Cost and care of a guide dog or other animal aiding a person with a physical disability.
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Costs for a school that furnishes special education if a principal reason for using the school is its resources for relieving a mental or physical disability. This includes the cost of teaching Braille and lip reading and the cost of remedial language training to correct a condition caused by a birth defect.
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Premiums for qualified long-term care insurance, up to certain amounts.
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Improvements to a home that do not increase its value if the main purpose is medical care. An example is constructing entrance or exit ramps.
Improvements that increase a home's value, if the main purpose is medical care, may be partly included as a medical expense. See Publication 502 for more information.
If you are disabled, you can take a business deduction for expenses that are necessary for you to be able to work. If you take a business deduction for these impairment-related work expenses, they are not subject to the 7.5% limit that applies to medical expenses.
You are disabled if you have:
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A physical or mental disability (for example, blindness or deafness) that functionally limits your being employed, or
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A physical or mental impairment (for example, a sight or hearing impairment) that substantially limits one or more of your major life activities, such as performing manual tasks, walking, speaking, breathing, learning, or working.
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Necessary for you to do your work satisfactorily,
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For goods and services not required or used, other than incidentally, in your personal activities, and
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Not specifically covered under other income tax laws.
Publication 502, Medical and Dental Expenses, contains more detailed information.
This discussion highlights three tax credits that may be of interest to people with disabilities and those who care for people with disabilities.
If you pay someone to care for either your dependent under age 13 or your spouse or dependent who is not able to care for himself or herself, you may be able to get a credit of up to 35% of your expenses. To qualify, you must pay these expenses so you can work or look for work. The care must be provided for:
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Your qualifying child who is your dependent and who was under age 13 when the care was provided,
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Your spouse who was physically or mentally not able to care for himself or herself and lived with you for more than half the year, or
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A person who was physically or mentally not able to care for himself or herself, lived with you for more than half the year, and either:
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Was your dependent, or
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Would have been your dependent except that:
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He or she received gross income of $3,500 or more,
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He or she filed a joint return, or
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You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2008 return.
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You can claim the credit on Form 1040 or 1040A. You figure the credit on Form 2441 (Form 1040) or Schedule 2 (Form 1040A).
For more information, see the instructions for Form 1040, line 48, or Form 1040A, line 29. Publication 503, Child and Dependent Care Expenses, contains more detailed information.
You may be able to claim this credit if you are 65 or older or if you are under 65 and you retired on permanent and total disability.
You can claim the credit on Form 1040 or 1040A. You figure the credit on Schedule R (Form 1040) or on Schedule 3 (Form 1040A).
For more information, see the instructions for Form 1040, line 49, or Form 1040A, line 30. Publication 524, Credit for the Elderly or the Disabled, contains more detailed information.
This credit is based on the amount of your earned income. You can get the credit if your adjusted gross income for 2008 is less than:
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$12,880 ($15,880 for married filing jointly) if you do not have a qualifying child,
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$33,995 ($36,995 for married filing jointly) if you have one qualifying child, or
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$38,646 ($41,646 for married filing jointly) if you have more than one qualifying child.
To figure the credit, use the worksheet in the instructions for Form 1040, 1040A, or 1040EZ. If you have a qualifying child, also complete Schedule EIC, Earned Income Credit, and attach it to your Form 1040 or 1040A. You cannot use Form 1040EZ if you have a qualifying child.
If you pay someone to work in your home, such as a babysitter or housekeeper, you may be a household employer who has to pay employment taxes.
A person you hire through an agency is not your employee if the agency controls what work is done and how it is done. This control could include setting the fee, requiring regular reports, and providing rules of conduct and appearance. In this case you do not have to pay employment taxes on the amount you pay. But if you control what work is done and how it is done, the worker is your employee. If a worker is your employee, it does not matter that you hired the worker through an agency or from a list provided by an agency.
To find out if you have to pay employment taxes, see Publication 926, Household Employer's Tax Guide.
If you own or operate a business, or you are looking for work, you should be aware of the following tax incentives for businesses to help persons with disabilities.
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Deduction for costs of removing barriers to the disabled and the elderly—This is a deduction a business can take for making a facility or public transportation vehicle more accessible to and usable by persons who are disabled or elderly. For more information, see chapter 7 of Publication 535, Business Expenses.
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Disabled access credit—This is a nonrefundable tax credit for an eligible small business that pays or incurs expenses to provide access to persons with disabilities. The expenses must be to enable the eligible small business to comply with the Americans with Disabilities Act of 1990. See Form 8826, Disabled Access Credit, for more information.
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Work opportunity credit—This credit provides businesses with an incentive to hire individuals from targeted groups that have a particularly high unemployment rate or other special employment needs. One targeted group consists of vocational rehabilitation referrals. These are individuals who have a physical or mental disability that results in a substantial handicap to employment. See Form 5884, Work Opportunity Credit, and Publication 954, Tax Incentives for Distressed Communities, for more information.
You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get information from the IRS in several ways. By selecting the method that is best for you, you will have quick and easy access to tax help.
www.irs.gov and enter keyword “VITA” in the upper right-hand corner.
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E-file your return. Find out about commercial tax preparation and e-file services available free to eligible taxpayers.
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Check the status of your 2008 refund. Go to www.irs.gov and click on Where's My Refund. Wait at least 72 hours after the IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after mailing a paper return. If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). Have your 2008 tax return available so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund.
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Download forms, instructions, and publications.
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Order IRS products online.
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Research your tax questions online.
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Search publications online by topic or keyword.
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View Internal Revenue Bulletins (IRBs) published in the last few years.
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Figure your withholding allowances using the withholding calculator online at www.irs.gov/individuals.
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Determine if Form 6251 must be filed by using our Alternative Minimum Tax (AMT) Assistant.
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Sign up to receive local and national tax news by email.
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Get information on starting and operating a small business.
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Ordering forms, instructions, and publications. Call 1-800-829-3676 to order current-year forms, instructions, and publications, and prior-year forms and instructions. You should receive your order within 10 days.
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Asking tax questions. Call the IRS with your tax questions at 1-800-829-1040.
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Solving problems. You can get face-to-face help solving tax problems every business day in IRS Taxpayer Assistance Centers. An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. Call your local Taxpayer Assistance Center for an appointment. To find the number, go to www.irs.gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service.
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TTY/TDD equipment. If you have access to TTY/TDD equipment, call 1-800-829-4059 to ask tax questions or to order forms and publications.
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TeleTax topics. Call 1-800-829-4477 to listen to pre-recorded messages covering various tax topics.
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Refund information. To check the status of your 2008 refund, call 1-800-829-1954 during business hours or 1-800-829-4477 (automated refund information 24 hours a day, 7 days a week). Wait at least 72 hours after the IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after mailing a paper return. If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). Have your 2008 tax return available so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. Refunds are sent out weekly on Fridays. If you check the status of your refund and are not given the date it will be issued, please wait until the next week before checking back.
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Other refund information. To check the status of a prior year refund or amended return refund, call 1-800-829-1954.
Evaluating the quality of our telephone services. To ensure IRS representatives give accurate, courteous, and professional answers, we use several methods to evaluate the quality of our telephone services. One method is for a second IRS representative to listen in on or record random telephone calls. Another is to ask some callers to complete a short survey at the end of the call. Walk-in. Many products and services are available on a walk-in basis.
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Products. You can walk in to many post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Some IRS offices, libraries, grocery stores, copy centers, city and county government offices, credit unions, and office supply stores have a collection of products available to print from a CD or photocopy from reproducible proofs. Also, some IRS offices and libraries have the Internal Revenue Code, regulations, Internal Revenue Bulletins, and Cumulative Bulletins available for research purposes.
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Services. You can walk in to your local Taxpayer Assistance Center every business day for personal, face-to-face tax help. An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local Taxpayer Assistance Center where you can spread out your records and talk with an IRS representative face-to-face. No appointment is necessary—just walk in. If you prefer, you can call your local Center and leave a message requesting an appointment to resolve a tax account issue. A representative will call you back within 2 business days to schedule an in-person appointment at your convenience. If you have an ongoing, complex tax account problem or a special need, such as a disability, an appointment can be requested. All other issues will be handled without an appointment. To find the number of your local office, go to www.irs.gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service.
Internal Revenue Service
1201 N. Mitsubishi Motorway
Bloomington, IL 61705-6613
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Current-year forms, instructions, and publications.
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Prior-year forms, instructions, and publications.
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Tax Map: an electronic research tool and finding aid.
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Tax law frequently asked questions.
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Tax Topics from the IRS telephone response system.
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Internal Revenue Code—Title 26 of the U.S. Code.
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Fill-in, print, and save features for most tax forms.
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Internal Revenue Bulletins.
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Toll-free and email technical support.
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Two releases during the year.
– The first release will ship the beginning of January 2009.
– The final release will ship the beginning of March 2009.
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Helpful information, such as how to prepare a business plan, find financing for your business, and much more.
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All the business tax forms, instructions, and publications needed to successfully manage a business.
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Tax law changes for 2009.
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Tax Map: an electronic research tool and finding aid.
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Web links to various government agencies, business associations, and IRS organizations.
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“Rate the Product” survey—your opportunity to suggest changes for future editions.
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A site map of the guide to help you navigate the pages with ease.
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An interactive “Teens in Biz” module that gives practical tips for teens about starting their own business, creating a business plan, and filing taxes.
www.irs.gov and enter keyword “SBRG” in the upper right-hand corner for more information.
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