How to Claim a Federal Tax Credit for the Elderly or Disabled

Mark Shalloway
Jan 3 · 3 min read

Be it on a state or national level, elderly taxpayers can find a wide variety of laws or programs that are designed to benefit them. The direct federal tax credit for elderly and disabled taxpayers carries a number of perks — like the provision for the caretaker of an elderly person which allows them the ability to claim the senior as a dependent — but today, we are going to talk about the direct benefits provided to the elderly and disabled under the Elderly and Disabled Credit (E & D Credit).

Credit: AccountingWEB

Federal Tax Forms from the Internal Revenue Service

Anyone looking for a tax credit must have a complete understanding of the differences between typical IRS tax forms. Some firms must be filled out annually, and some don’t need to be. It is important to know which is which, and what exactly is “sufficient income.”

  • 1040EZ — This form is usually used by individuals filing as “single” or “married filing jointly” with no dependents. These people have a taxable income of $50,000 or less from wages, salaries, tips, taxable scholarships and grants, unemployment compensation or certain dividends with no more than $1,500 interest income and no itemized deductions or credits.
  • 1040A — This form is often used by those who do not qualify for Form 1040EZ — including taxpayers with a taxable income of $50,000 or less. This figure does include income from additional sources and does not allow itemized deductions, but unlike 1040EZ, it allows certain “adjustments to income” and “credits” (such as those for the elderly or disabled).
  • 1040 — This form is the most complicated of the three by providing the most opportunities for tax deductions and permits listing tax credits and income adjustments. The 1040 has no income limitation and must be used for certain types of income (self-employment, unreported tips, partnership distributions, capital gains distributions, or foreign trust distributions), and must be used if the taxpayer had a foreign bank and/or securities account with a value over $10,000.
Credit: Aging in Place

Who Qualifies for the Tax Credit for the Elderly and Disabled?

The taxpayer must be a citizen or resident of a state, have an adjusted gross income or nontaxable social security and pension income below the above specified amounts, and be:

  • 65 years old at the end of the tax year for for which the credit is claimed
  • Under 65, but retired and on permanent/total disability with a received taxable disability info the tax year in which the credit is claimed.

How to Claim the E & D Credit

Taxpayers using Form 1040 or 1040A may receive the E & D Credit, but not those filing Form 1040EZ. Persons married must file a joint tax return to take the credit, but in some cases, married persons filing separately may be able to claim the credit. Disabled persons under 65 who would like the claim the credit must get a physician’s statement that certifies this permanent and total disability.

Credit: Time

Those who qualify receive a schedule for calculating the credit that requires the taxpayers to check boxes regarding their qualification, which must be included when filing the basic form. For the E & D Credit, “Schedule R” must be used, and it is subtracted directly from the tax amount that would otherwise be owed, as opposed to a “deduction” (which would reduce the amount of income subject to be taxed).

The federally funded Tax Counseling for the Elderly (TCE) program helps elderly persons if tax preparation problems arise. The elder can also have the IRS calculate the credit by attaching Schedule R to the return, checking the appropriate box, and centering CFE on form 1040 (line 53) or 1040 (line 30). An attorney or accountant can also ensure the the taxpayer qualifies for the credit.

Mark Shalloway

Written by

Mark Shalloway is an elder and special needs care attorney in West Palm Beach, Florida.

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