Chapter 34
Credit for the elderly or the disabled
If you qualify, you may be able to reduce the tax you owe by taking the credit for the elderly or the disabled on Schedule R (Form 1040A or 1040).
This chapter explains:
- Who qualifies for the credit for the elderly or the disabled, and
- How to claim the credit.
You may be able to take the credit for the elderly or the disabled if:
- You are age 65 or older at the end of 2017, or
- You retired on permanent and total disability and have taxable disability income.
Useful Items
You may want to see:
Publication
524 Credit for the Elderly or the Disabled- 554 Tax Guide for Seniors
Form (and Instruction)
- Schedule R (Form 1040A or 1040) Credit for the Elderly or the Disabled
Are You Eligible for the Credit?
You can take the credit for the elderly or the disabled if you meet both of the following requirements.
- You are a qualified individual.
- Your income is not more than certain limits.
You can use Figure 34.A and Table 34.1 as guides to see if you are eligible for the credit. Use Figure 34.A first to see if you are a qualified individual. If you are, go to Table 34.1 to make sure your income is not too high to take the credit.
Figure 34.A Are You a Qualified Individual?
1 However, you may be able to claim this credit if you lived with your spouse during the first 6 months of the year and you qualify to file as head of household. You qualify to file as head of household if you are considered unmarried and meet certain other conditions. See chapter 2 for more information.
2 If you were a nonresident alien at any time during the tax year and were married to a U.S. citizen or resident alien at the end of the tax year, see U.S. Citizen or Resident Alien under Qualified Individual. If you and your spouse choose to treat you as a U.S. resident alien, answer “Yes” to this question.
3 Mandatory retirement age is the age set by your employer at which you would have been required to retire, had you not become disabled.
Table 34.1 Income Limits
| THEN, even if you qualify (see Figure 34.A), you CANNOT take the credit if . . . | ||
| IF your filing status is . . . | Your adjusted gross income (AGI)1 is equal to or more than . . . | OR the total of your nontaxable social security and other nontaxable pension(s), annuities, or disability income is equal to or more than . . . |
| single, head of household, or qualifying widow(er) with dependent child | $17,500 | $5,000 |
| married filing jointly and only one spouse qualifies in Figure 34.A | $20,000 | $5,000 |
| married filing jointly and both spouses qualify in Figure 34.A | $25,000 | $7,500 |
| married filing separately and you lived apart from your spouse for all of 2017 | $12,500 | $3,750 |
Qualified Individual
You are a qualified individual for this credit if you are a U.S. citizen or resident alien, and either of the following applies.
- You were age 65 or older at the end of 2017.
- You were under age 65 at the end of 2017 and all three of the following statements are true.
- You retired on permanent and total disability (explained later).
- You received taxable disability income for 2017.
- On January 1, 2017, you had not reached mandatory retirement age (defined later under Disability income).
Age 65. You are considered to be age 65 on the day before your 65th birthday. Therefore, if you were born on January 1, 1953, you are considered to be age 65 at the end of 2017.
Death of a taxpayer. If you are preparing a return for someone who died in 2017, consider the taxpayer to be age 65 at the end of 2017 if he or she was age 65 or older on the day before their death. For example, if the taxpayer was born on February 14, 1952 and died on February 13, 2017, the taxpayer is considered age 65 at the time of death. However, if the taxpayer died on February 12, 2017, the taxpayer is not considered age 65 at the time of death or at the end of 2017.
U.S. Citizen or Resident Alien
You must be a U.S. citizen or resident alien (or be treated as a resident alien) to take the credit. Generally, you cannot take the credit if you were a nonresident alien at any time during the tax year.
Exceptions. You may be able to take the credit if you are a nonresident alien who is married to a U.S. citizen or resident alien at the end of the tax year and you and your spouse choose to treat you as a U.S. resident alien. If you make that choice, both you and your spouse are taxed on your worldwide incomes.
If you were a nonresident alien at the beginning of the year and a resident alien at the end of the year, and you were married to a U.S. citizen or resident alien at the end of the year, you may be able to choose to be treated as a U.S. resident alien for the entire year. In that case, you may be allowed to take the credit.
For information on these choices, see chapter 1 of Pub. 519, U.S. Tax Guide for Aliens.
Married Persons
Generally, if you are married at the end of the tax year, you and your spouse must file a joint return to take the credit. However, if you and your spouse did not live in the same household at any time during the tax year, you can file either a joint return or separate returns and still take the credit.
Head of household. You can file as head of household and qualify to take the credit, even if your spouse lived with you during the first 6 months of the year, if you meet certain tests. See Head of Household in chapter 2 for the tests you must meet.
Under Age 65
If you are under age 65 at the end of 2017, you can qualify for the credit only if you are retired on permanent and total disability (discussed next) and have taxable disability income (discussed later under Disability income). You are retired on permanent and total disability if:
- You were permanently and totally disabled when you retired, and
- You retired on disability before the close of the tax year.
Even if you do not retire formally, you may be considered retired on disability when you have stopped working because of your disability.
If you retired on disability before 1977, and were not permanently and totally disabled at the time, you can qualify for the credit if you were permanently and totally disabled on January 1, 1976, or January 1, 1977.
Permanent and total disability. You are permanently and totally disabled if you cannot engage in any substantial gainful activity because of your physical or mental condition. A qualified physician must certify that the condition has lasted or can be expected to last continuously for 12 months or more, or that the condition can be expected to result in death. See Physician’s statement, later.
Substantial gainful activity. Substantial gainful activity is the performance of significant duties over a reasonable period of time while working for pay or profit, or in work generally done for pay or profit. Full-time work (or part-time work done at your employer’s convenience) in a competitive work situation for at least the minimum wage conclusively shows that you are able to engage in substantial gainful activity.
Note. Information on minimum wage rates is available on the Department of Labor’s Wage and Hour Division webpage at www.dol.gov/general/topic/wages/minimumwage.
Substantial gainful activity is not work you do to take care of yourself or your home. It is not unpaid work on hobbies, institutional therapy or training, school attendance, clubs, social programs, and similar activities. However, the nature of the work you perform may show that you are able to engage in substantial gainful activity.
The fact that you have not worked or have been unemployed for some time is not, of itself, conclusive evidence that you cannot engage in substantial gainful activity. See Pub. 524 for some examples of activity that may constitute substantial gainful activity.
Sheltered employment. Certain work offered at qualified locations to physically or mentally impaired persons is considered sheltered employment. These qualified locations include work centers that are certified by the Department of Labor (formerly referred to as sheltered workshops), hospitals, and similar institutions, homebound programs, and Department of Veterans Affairs (VA) sponsored homes.
Compared to commercial employment, pay is lower for sheltered employment. Therefore, one usually does not look for sheltered employment if he or she can get other employment. The fact that one has accepted sheltered employment is not proof of the person’s ability to engage in substantial gainful activity.
Physician’s statement. If you are under age 65, you must have your physician complete a statement certifying that you were permanently and totally disabled on the date you retired. You can use the statement in the Instructions for Schedule R.
You do not have to file this statement with your Form 1040 or Form 1040A, but you must keep it for your records.
Veterans. If the Department of Veterans Affairs (VA) certifies that you are permanently and totally disabled, you can substitute VA Form 21-0172, Certification of Permanent and Total Disability, for the physician’s statement you are required to keep. VA Form 21-0172 must be signed by a person authorized by the VA to do so. You can get this form from your local VA regional office.
Physician’s statement obtained in earlier year. If you got a physician’s statement in an earlier year and, due to your continued disabled condition, you were unable to engage in any substantial gainful activity during 2017, you may not need to get another physician’s statement for 2017. For a detailed explanation of the conditions you must meet, see the Instructions for Schedule R, Part II. If you meet the required conditions, check the box on your Schedule R, Part II, line 2.
If you checked box 4, 5, or 6 in Part I of Schedule R, enter in the space above the box on line 2 in Part II the first name(s) of the spouse(s) for whom the box is checked.
Disability income. If you are under age 65, you must also have taxable disability income to qualify for the credit. Disability income must meet both of the following requirements.
- It must be paid under your employer’s accident or health plan or pension plan.
- It must be included in your income as wages (or payments instead of wages) for the time you are absent from work because of permanent and total disability.
Payments that are not disability income. Any payment you receive from a plan that does not provide for disability retirement is not disability income. Any lump-sum payment for accrued annual leave that you receive when you retire on disability is a salary payment and is not disability income.
For purposes of the credit for the elderly or the disabled, disability income does not include amounts you receive after you reach mandatory retirement age. Mandatory retirement age is the age set by your employer at which you would have had to retire, had you not become disabled.
Income Limits
To determine if you can claim the credit, you must consider two income limits. The first limit is the amount of your adjusted gross income (AGI). The second limit is the amount of nontaxable social security and other nontaxable pensions, annuities, or disability income you received. The limits are shown in Table 34-1.
If your AGI and nontaxable pensions, annuities, or disability income are less than the income limits, you may be able to claim the credit. See How To Claim the Credit, later.
How To Claim the Credit
You can figure the credit yourself or the Internal Revenue Service (IRS) will figure it for you. If you want to figure the credit yourself, skip to Credit Figured by You, below.
Credit Figured for You
If you want the IRS to figure the credit for you, read the following discussion for the form you will file (Form 1040 or 1040A).
Form 1040. If you want the IRS to figure your credit, see Form 1040 Line Entries under Tax Figured by IRS in chapter 31.
Form 1040A. If you want the IRS to figure your credit, see Form 1040A Line Entries under Tax Figured by IRS in chapter 31.
If you want the IRS to figure your tax, see chapter 31.
Credit Figured by You
To figure the credit yourself, first check the box in Part I of Schedule R that applies to you. Only check one box in Part I. If you check box 2, 4, 5, 6, or 9 in Part I, also complete Part II of Schedule R.
Next, figure the amount of your credit using Part III of Schedule R. For a step-by-step discussion about filling out Part III of Schedule R, see Figuring the Credit Yourself in Pub. 524.
Finally, report the amount from line 22 of Schedule R on your tax return. If you file Form 1040A, enter the amount from Schedule R, line 22, on Form 1040A, line 32. If you file Form 1040, include the amount from Schedule R, line 22, on line 54; check box c, and enter “Sch R” on the line next to that box.
Limit on credit. The amount of the credit you can claim is generally limited to the amount of your tax. Use the Credit Limit Worksheet in the Instructions for Schedule R to determine if your credit is limited.