Credit for the Elderly or the Disabled – Schedule R

The Credit for the Elderly or the Disabled is a nonrefundable credit, and its calculation varies depending on the taxpayer’s filing status, age, and income. If the tax return has a filing status of married filing jointly, the spouse’s age, income, and disability status are also taken into account.

This credit may be taken if all of the following applies:

1. The taxpayer was age 65 or older at the end of the tax year, or
2. The taxpayer was under age 65 at the end of the tax year and all of the following are true:
   • They were permanently and totally disabled on the date they retired.
   • They received taxable disability income for all of the tax year.
   • On January 1, they hadn’t reached mandatory retirement age (the age at which their employer’s retirement program would have required them to retire).

Taxpayers born on January 1 are considered to be age 65 the day before their 65th birthday.

Taxable disability income has two characteristics:

1. It is paid under the employer’s accident or health plan or pension plan.
2. It is included in income as wages (or payments instead of wages) for the time the taxpayer was absent from work because of permanent and total disability.

To access the Credit for the Elderly or the Disabled, from the Main Menu of the tax return (Form 1040) select:

• Credits Menu
• Credit for the Elderly or the Disabled (Sch R)
• Select the appropriate Filing Status for the credit. MFJ returns will have more possible filing status options than other returns.
• A Statement of Permanent and Total Disability is required for certain filing statuses, and depending on whether or not the disability is permanent a new statement may need to be obtained for the tax year. For the filing statuses that require it, indicate if the taxpayer has the statement in hand. The statement can be found in the Schedule R instructions and, once signed by the physician, should be retained by the taxpayer.
• Enter the income amounts requested, if any:
  • Taxable disability income
  • Nontaxable portion of Social Security and Railroad Retirement benefits
  • Nontaxable pensions or other pension, annuity, or disability benefit excluded from income

Note: This is a guide to entering the credit for the elderly or the disabled into the Keystone Tax Solutions Pro program.  This is not intended as tax advice.  For additional information, refer to the Additional Information below.

Additional Information:

Publication 524, Credit for the Elderly or the Disabled