IRS definition for permanently and totally disabled -
Permanently and totally disabled. Your child is permanently and totally disabled if both of the following apply.
• Your child can't engage in any substantial gainful activity because of a physical or mental condition.
• A doctor determines the condition has lasted or can be expected to last continuously for at least a year or can lead to death
If the child is under the age of 19 designating them as disabled does not give you any tax benefit, other than using the Child and Dependent Care Credit.
Disabled for tax purposes means unable to perform gainful work (work for money). Being able to work a minimum wage job without significant accommodations is considered proof they can perform gainful work, but employment at a sheltered workshop for disabled persons does not count as gainful work. Many people who have medically recognized disabilities can still work, and are not disabled for tax purposes.
For a dependent child, being disabled has no tax benefits for the parents, except that if the child is unable to care for themselves, you can claim the child and dependent care credit for day care expenses while you work even after the child turns 13.
For an adult (19 or older), if they are unable to work, you may be able to continue to claim them as a dependent when a non-disabled adult would not qualify.