The Elderly and Disabled Tax Credit

Roxanna Guinan
by Roxanna Guinan, Contributor

 

If you are a person aged 65 or older, or you are disabled, you may be able to claim the Elderly and Disabled Tax Credit on your federal income tax return.  To qualify as disabled, you must be retired, be permanently and totally disabled, and you must be receiving disability benefits.

Qualified Individuals

You are eligible for the Elderly and Disabled Tax 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 the tax year
  • You were under age 65 at the end of the tax year and all 3 of the following statements are true:
  • You retired on permanent and total disability ― even if you do not retire formally, you may be considered “retired on disability” when you have  stopped working because of your disability
  • You received taxable disability income during the tax year
  • As of January 1 of the filing year, you did not reach mandatory retirement age

Generally, you cannot take the tax credit if you were a nonresident alien at any time during the tax year. You may be able to take the tax 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 choose to be treated as a U.S. resident alien for tax purposes. If you make that choice, both you and your spouse will be taxed on your worldwide incomes.

If you were a nonresident alien at the beginning of the tax 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 that entire year. In that case, you may be allowed to take the Elderly and Disabled Tax Credit.

Married Persons Filing for the Elderly and Disabled Tax Credit

If you are married at the end of the tax year and living together in the same household, you and your spouse must file a joint tax return to claim the Elderly and Disabled Tax Credit. However, if you and your spouse did not live in the same household at any time during the tax year, you may choose to file either joint or separate returns, and still take the tax credit.

Head of Household

You can file as “head of household” and qualify for the Elderly and Disabled Tax Credit (even if your spouse lived with you during the first 6 months of the year) if you meet all the following requirements:

  • You file a separate tax 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, and the absence was not temporary
  • Your home was the main home for your child, stepchild, or eligible foster child for more than half the year ― an eligible foster child is a child placed with you by an authorized placement agency or by judgment, decree, or other order from a court of competent jurisdiction
  • You can claim an exemption for that child, or, you cannot claim the exemption only because the non-custodial parent can claim the child using the rules for children of divorced or separated parents.

Under Age 65

If you are under age 65 at the end of 2009, you can qualify for the tax credit only if you are retired on permanent and total disability, and you have taxable disability income. You must have been permanently and totally disabled when you retired, and you must have retired on disability before the end of the tax year.

If you retired on disability before 1977 and were not permanently and totally disabled at the time, you can still qualify for this tax credit if you were permanently and totally disabled as of January 1, 1976 or January 1, 1977.

Income Limits for the Elderly and Disabled Tax Credit

To determine if you can claim the Elderly and Disabled Tax Credit, you must consider two major income limits. The first limit involves the amount of your adjusted gross income (AGI). The second limit pertains to the amount of nontaxable Social Security benefits and other nontaxable pensions you received.

Refer to the table below for income limits:

EVEN IF YOU QUALIFY, you CANNOT take the Elderly and Disabled Tax Credit if:

If your filing status is: Your adjusted gross income (AGI) is equal to or more than: Or the total of your non-taxable Social Security benefits and other non-taxable pension(s) is equal to or more than:
Single, Head of Household, or Qualifying Widow(er) with Dependent Child $17,500 $5,000
Married Filing a Joint Return and both spouses qualify $25,000 $7,500
Married Filing a Joint Return and only one spouse qualifies $20,000 $5,000
Married Filing Separate Returns $12,500 $3,750

To claim the Elderly and Disabled Tax Credit, you must file either IRS Form 1040 (U.S. Individual Income Tax Return) or IRS Form 1040A (U.S. Individual Income Tax Return – Short Form). You cannot file IRS Form 1040EZ.