This section explains who qualifies for the credit for the elderly
or the disabled and how to figure this credit. The maximum credit
available is $1,125. You may be able to take this credit if you are
age 65 or older, or if you are retired on permanent and total
You can take the credit only if you file Form 1040 or Form 1040A.
You cannot take the credit if you file Form 1040EZ.
Credit figured for you.
If you choose to have the IRS figure the credit for you, see
Credit for the Elderly or the Disabled. If
you want the IRS to figure your tax, see Publication 967,
Will Figure Your Tax.
Can You Take the Credit?
You can take the credit for the elderly or the disabled if:
- You are a qualified individual, and
- Your income is not more than certain limits.
See Figures A and B, next.
Figures A and B. Are You a Qualified Individual?
You are a qualified individual for this credit if you are a U.S.
citizen or resident at the end of the tax year, and you are:
- Age 65 or older, or
- Under 65, retired on permanent and total disability, and
- Received taxable disability income, and
- Did not reach mandatory retirement age (defined later under
Disability income) before the tax year.
Age 65. You are considered to be age 65 on the day
before your 65th birthday. Therefore, you are age 65 at the end of the
year if your 65th birthday is on January 1 of the following year.
U.S. citizen or resident.
You must be a U.S. citizen or resident (or be treated as a
resident) to take the credit. Generally, you cannot take the credit if
you were a nonresident alien at any time during the tax year.
You may be able to take the credit if you are a nonresident alien
who is married to a U.S. citizen or resident at the end of the tax
year and you and your spouse choose to treat you as a U.S. resident.
If you make that choice, both you and your spouse are taxed on your
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 all of the tests. See Publication 524
and Publication 501.
Under age 65.
If you are under age 65, you can qualify for the credit only if you
are retired on permanent and total disability. You are retired on
permanent and total disability if:
- You were permanently and totally disabled when you retired,
- You retired on disability before the end of the tax year.
Even if you do not retire formally, you are considered retired on
disability when you have stopped working because of your disability.
If you retired on disability before 1977, see Publication 524.
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 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
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 the employer's
convenience) in a competitive work situation for at least the minimum
wage conclusively shows that you are able to engage in substantial
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, doing this kind of work may show that you
are able to engage in substantial gainful activity.
The fact that you have not worked for some time is not, of itself,
conclusive evidence that you cannot engage in substantial gainful
The following examples illustrate the tests of substantial gainful
Trisha, a sales clerk, retired on disability. She is 53 years old
and now works as a full-time baby-sitter for minimum wage. Even though
Trisha is doing different work, she is able to do the duties of her
new job in a full-time competitive work situation for the minimum
wage. She cannot take the credit because she is able to engage in
substantial gainful activity.
Tom, a bookkeeper, retired on disability. He is 59 years old and
now drives a truck for a charitable organization. He sets his own
hours and is not paid. Duties of this nature generally are performed
for pay or profit. Some weeks he works 10 hours and some weeks he
works 40 hours. Over the year he averages 20 hours a week. The kind of
work and his average hours a week conclusively show that Tom is able
to engage in substantial gainful activity. This is true even though
Tom is not paid and he sets his own hours. He cannot take the credit.
John, who retired on disability, took a job with a former employer
on a trial basis. The purpose of the job was to see if John could do
the work. The trial period lasted for 6 months during which John was
paid the minimum wage. Because of John's disability, he was assigned
only light duties of a nonproductive "make-work" nature. The
activity was gainful because John was paid at least the minimum wage.
But the activity was not substantial because his duties were
nonproductive. These facts do not, by themselves, show that John is
able to engage in substantial gainful activity.
Joan, who retired on disability from employment as a bookkeeper,
lives with her sister who manages several motel units. Joan assists
her sister for 1 or 2 hours a day by performing duties such as washing
dishes, answering phones, registering guests, and bookkeeping. Joan
can select the time during the day when she feels most fit to perform
the tasks undertaken. Work of this nature, performed off and on during
the day at Joan's convenience, is not activity of a "substantial and
gainful" nature even if she is paid for the work. The performance
of these duties does not, of itself, show that Joan is able to engage
in substantial gainful activity.
Certain work offered at qualified locations to physically or
mentally impaired persons is considered sheltered employment. These
qualified locations are in 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.
If you are under 65, you must have your physician complete a
statement certifying that you are permanently and totally disabled on
the date you retired.
You do not have to file this statement with your Form 1040 or Form
1040A, but you must keep it for your records. The
instructions for either Schedule R (Form 1040) or Schedule 3 (Form
1040A) include a statement your physician can complete and that you
can keep for your records.
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 2000, you may not
need to get another physician's statement for 2000. For a detailed
explanation of the conditions you must meet, see the instructions for
Part II of Schedule R (Form 1040) or Schedule 3 (Form 1040A). If you
meet the required conditions, you must check the box on line 2 of Part
II of Schedule R (Form 1040) or Schedule 3 (Form 1040A).
If you checked box 4, 5, or 6 in Part I of either Schedule R or
Schedule 3, print in the space above the box on line 2 of Part II, the
first name(s) of the spouse(s) for whom the box is checked.
If you are under age 65, you can qualify for the credit only if you
have taxable disability income.
Disability income must meet the following two requirements:
- The income must be paid under your employer's accident or
health plan or pension plan, and
- The income must be wages (or payments in lieu of wages) for
the time you are absent from work because of permanent and total
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.
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 or other nontaxable pensions you received. The limits are
shown in Figure B.
If the amount of your AGI and nontaxable pensions are less than the
income limits, you may be able to claim the credit.
If the amount of your AGI or nontaxable pensions is equal to or
more than the income limits, you cannot take the credit.
Figuring the Credit
If you figure the credit yourself, fill out the front of either
Schedule R (if you are filing Form 1040) or Schedule 3 (if you are
filing Form 1040A). Next, fill out Part III of either Schedule R or
There are four steps in Part III to determine the amount of your
- Determine your initial amount (lines
- Total any nontaxable social security and certain
other nontaxable pensions and disability benefits you received (lines
14a, 14b, and 14c).
- Determine your excess adjusted gross income,
- Determine your credit (lines 18-20).
For more information on these steps, get Publication 524.
Limit on Credit
The amount of credit you can claim may be limited. Use one of the
worksheets in Publication 524
(or the worksheet in the instructions
for Schedule 3, Form 1040A, or Schedule R, Form 1040, whichever
applies) to determine the amount of credit you can claim if any of the
- You file Form 1040A and the credit you figured on line 20 of
Schedule 3, is more than the tax on Form 1040A, line 26.
- You file Form 1040 and the credit you figured on line 20 of
Schedule R is more than the amount on Form 1040, line 42 (regular tax
plus any alternative minimum tax), minus any foreign tax credit on
Form 1040, line 43.
- You are claiming the credit for child and dependent care
- Form 1040A, line 27, or
- Form 1040, line 44.
If 1, 2, and 3 above do not apply, you do not need to use a
worksheet to figure a limit on your credit. Claim the full amount of
the credit you figured on Schedule 3 (Form 1040A) or Schedule R (Form
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