Tax Credits

This discussion highlights three tax credits that may be of interest to people with disabilities and those who care for people with disabilities.

Child and Dependent Care Credit

Generally, 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 30% of your expenses. To qualify, you must pay these expenses so you can work or look for work.

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 line 44 (Form 1040) or line 27 (Form 1040A). Publication 503, Child and Dependent Care Expenses, contains more detailed information.

Credit for the Elderly or the Disabled

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 line 45 (Form 1040) or line 28 (Form 1040A). Publication 524, Credit for the Elderly or the Disabled, contains more detailed information.

Earned Income Credit

This credit is based on the amount of your earned income. But you can get the credit only if your earned income for 2001 was less than:

• $10,710 and you did not have a qualifying child,
• $28,281 and you had one qualifying child, or
• $32,121 and you had 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.

Qualifying child. A qualifying child must be under age 19 at the end of 2001, or a full-time student under age 24 at the end of 2001, or permanently and totally disabled at any time during 2001, regardless of age.

Earned income. If you are retired on disability, benefits you receive under your employer's disability retirement plan are considered earned income until you reach minimum retirement age. However, payments you received from a disability insurance policy that you paid the premiums for are not earned income.

More information. For more information, including all the requirements to claim the credit, see the instructions for lines 61a and 61b (Form 1040), lines 39a and 39b (Form 1040A), or lines 9a and 9b (Form 1040EZ). Publication 596, Earned Income Credit (EIC), contains more detailed information.

Previous| First | Next

Publication Index | IRS-Forms Main | Home