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.
Figure A and BFigures A and B, shown later, can be used as
guides to see if you qualify. Use Figure A first to see if
you are a qualified individual. If you are, go to Figure B
to make sure your income is not too high to take the credit.
You can take the credit only if you file Form 1040 or Form 1040A.
You cannot take the credit if you file Form 1040EZ.
Qualified Individual
You are a qualified individual for this credit if you are a U.S.
citizen or resident and, at the end of the tax year, you are:
- Age 65 or older, or
- Under age 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 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.
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 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
worldwide incomes.
If you were a nonresident alien at the beginning of the year and a
resident at the end of the year, and you were married to a U.S.
citizen or resident at the end of the year, you may be able to choose
to be treated as a U.S. resident for the entire year. In that case,
you may be allowed to take the credit. For information on these
choices, see chapter 1 of Publication 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 joint 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 the following tests.
- You file a separate return.
- You paid more than half the cost of keeping up your home
during the tax year.
- Your spouse did not live in your home at any time during the
last 6 months of the tax year.
- Your home was the main home of your child, stepchild, or
adopted child for more than half the year or was the main home of your
foster child for the entire year.
- You claimed that child as a dependent, or you did not claim
that child only because:
- You allowed your spouse (the noncustodial parent) to claim
the child as a dependent by your written declaration ( Form 8332,
Release of Claim to Exemption for Child of Divorced or Separated
Parents, may be used for making the declaration), or
- A decree or agreement went into effect after 1984 and states
the noncustodial parent can claim the child as a dependent without
regard to any condition, such as a payment of support, or
- Your spouse (the noncustodial parent) provided at least $600
for the child's support and is entitled to claim the child as a
dependent because of a qualified pre-1985 agreement.
For more information on head of household and other filing
statuses, see Publication 501,
Exemptions, Standard Deduction,
and Filing Information.
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,
and
- You retired on disability before the close 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, 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 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.
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
activity.
The following examples illustrate the tests of substantial gainful
activity.
Example 1.
Trisha, a sales clerk, retired on disability. She is 53 years old
and now works as a full-time babysitter for the 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.
Example 2.
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.
Example 3.
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.
Example 4.
Joan, who retired on disability from a job as a bookkeeper, lives
with her sister who manages several motel units. Joan helps 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 of day when she feels most fit to work. 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.
Sheltered employment.
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.
Initial Income Amounts
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 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.
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 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, 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 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 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
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 you received. The limits are
shown in Figure B.
If both your AGI and your nontaxable pensions are less than the
income limits, you may be able to claim the credit. See Figuring
the Credit, next.
If either your AGI or your nontaxable pensions are equal
to or more than the income limits, you cannot take the credit.
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