Publication 524 – Introductory Material

Reminders

Future developments. For the latest information about developments related to Pub. 524, such as legislation enacted after it was published, go to IRS.gov/Pub524.

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Introduction

If you qualify, you may be able to reduce the tax you owe by taking the credit for the elderly or the disabled.

This publication explains:

• Who qualifies for the credit for the elderly or the disabled, and
• How to figure the credit.

 

You may be able to take the credit for the elderly or the disabled if:

• You are age 65 or older at the end of 2017, or
• You retired on permanent and total disability and have taxable disability income.

 

Comments and suggestions.

We welcome your comments about this publication and your suggestions for future editions.

You can send us comments through IRS.gov/FormComments. Or you can write to:

Internal Revenue Service
Tax Forms and Publications
1111 Constitution Ave. NW, IR-6526
Washington, DC 20224

 

Although we can’t respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax forms, instructions, and publications.

Ordering forms and publications.

Visit IRS.gov/FormsPubs to download forms and publications. Otherwise, you can go to IRS.gov/OrderForms to order current and prior-year forms and instructions. Your order should arrive within 10 business days.

Tax questions.

If you have a tax question not answered by this publication, check IRS.gov and How To Get Tax Help at the end of this publication.

Useful Items – You may want to see:

Publication

• 554Tax Guide for Seniors

Form (and Instructions)

• Schedule R (Form 1040A or 1040)Credit for the Elderly or the Disabled

See How To Get Tax Help , near the end of this publication, for information about getting this publication and form.

Publication 524 – Main Content

Are You Eligible for the Credit?

You can take the credit for the elderly or the disabled if you meet both of the following requirements.

• You are a qualified individual.
• Your income isn’t more than certain limits.

 

You can use Figure A and Table 1 as guides to see if you are eligible for the credit. Use Figure A first to see if you are a qualified individual. If you are, go to Table 1 to make sure your income isn’t too high to take the credit.

You can take the credit only if you file Form 1040 or Form 1040A. You can’t take the credit if you file Form 1040EZ or Form 1040NR.

Qualified Individual

You are a qualified individual for this credit if you are a U.S. citizen or resident alien, and either of the following applies.

1. You were age 65 or older at the end of 2017.
2. You were under age 65 at the end of 2017 and all three of the following statements are true.
   1. You retired on permanent and total disability (explained later).
   2. You received taxable disability income for 2017.
   3. On January 1, 2017, you had not reached mandatory retirement age (defined later under Disability income).

 

Age 65.

You are considered to be age 65 on the day before your 65th birthday. As a result, if you were born on January 1, 1953, you are considered to be age 65 at the end of 2017.

Death of taxpayer.

If you are preparing a return for someone who died in 2017, consider the taxpayer to be age 65 at the end of 2017 if he or she was age 65 or older at the time of death.

Note.

A person is considered to reach age 65 on the day before his or her 65th birthday. For example, if the taxpayer was born on February 14, 1952, and died on February 13, 2017, the taxpayer is considered age 65 at the time of death. However, if the taxpayer died on February 12, 2017, the taxpayer isn’t considered age 65 at the time of death or at the end of 2017.

U.S. Citizen or Resident Alien

You must be a U.S. citizen or resident alien (or be treated as a resident alien) to take the credit. Generally, you can’t 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 alien at the end of the tax year and you and your spouse choose to treat you as a U.S. resident alien. 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 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 the entire year. In that case, you may be allowed to take the credit.

For information on these choices, see chapter 1 of Pub. 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 didn’t live in the same household at any time during the tax year, you can file either a joint return 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.

1. You file a separate return.
2. You paid more than half the cost of keeping up your home during the tax year.
3. Your spouse didn’t live in your home at any time during the last 6 months of the tax year and the absence wasn’t temporary. (See Temporary absencesunder Head of Household in Pub. 501.)
4. Your home was the main home of your child, stepchild, or an 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 of any court of competent jurisdiction.
5. You can claim an exemption for that child, or you can’t claim the exemption only because the noncustodial parent can claim the child using the rules for children of divorced or separated parents.

For more information, see Pub. 501, Exemptions, Standard Deduction, and Filing Information.

Figure A. Are You a Qualified Individual?

figure a

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Under Age 65

If you are under age 65 at the end of 2017, you can qualify for the credit only if you are retired on permanent and total disability (discussed next) and have taxable disability income (discussed later under Disability income ). 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 don’t retire formally, you may be considered retired on disability when you have stopped working because of your disability.

If you retired on disability before 1977, and weren’t 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.

You are considered to be under age 65 at the end of 2017 if you were born after January 1, 1953.

Permanent and total disability.

You have a permanent and total disability if you can’t engage in any substantial gainful activity because of your physical or mental condition. A qualified 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.

Note.

Information on minimum wage rates is available at www.dol.gov/general/topic/wages/minimumwage.

Substantial gainful activity isn’t work you do to take care of yourself or your home. It isn’t unpaid work on hobbies, institutional therapy or training, school attendance, clubs, social programs, and similar activities. However, the nature of the work you perform may show that you are able to engage in substantial gainful activity.

The fact that you haven’t worked or have been unemployed for some time isn’t, of itself, conclusive evidence that you can’t 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 can’t 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 isn’t 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 per week conclusively show that Tom is able to engage in substantial gainful activity. This is true even though Tom isn’t paid and he sets his own hours. He can’t 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 wasn’t substantial because his duties were nonproductive. These facts don’t, 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, isn’t activity of a “substantial and gainful” nature even if she is paid for the work. The performance of these duties doesn’t, 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 include work centers that are certified by the Department of Labor (formerly referred to as 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 doesn’t look for sheltered employment if he or she can get other employment. The fact that one has accepted sheltered employment isn’t proof of the person’s ability to engage in substantial gainful activity.

Physician’s statement.

If you are under age 65, you must have your physician complete a statement certifying that you had a permanent and total disability on the date you retired. You can use the statement in the Instructions for Schedule R.

You don’t have to file this statement with your Form 1040 or Form 1040A, but you must keep it for your records.

Veterans.

If the Department of Veterans Affairs (VA) certifies that you have a permanent and total disability, 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 2017, you may not need to get another physician’s statement for 2017. For a detailed explanation of the conditions you must meet, see the instructions for Schedule R, Part II. If you meet the required conditions, check the box on your Schedule R, Part II, line 2.

If you checked box 4, 5, or 6 in Part I of Schedule R, enter 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 must also have taxable disability income to qualify for the credit. Disability income must meet both of the following requirements.

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

 

Payments that aren’t disability income.

Any payment you receive from a plan that doesn’t provide for disability retirement isn’t disability income. Any lump-sum payment for accrued annual leave that you receive when you retire on disability is a salary payment and isn’t disability income.

For purposes of the credit for the elderly or the disabled, disability income doesn’t 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, annuities, or disability income you received. The limits are shown in Table 1.

If your AGI and your nontaxable pensions, annuities, or disability income are less than the income limits, you may be able to claim the credit. See Figuring the Credit Yourself , later.

 

Table 1. Income Limits

IF your filing status is…	THEN, even if you qualify (see Figure A), you CAN’T take the credit if…
		Your adjusted gross income (AGI)* is equal to or more than…			OR the total of your nontaxable social security and other nontaxable pension(s), annuities, or disability income is equal to or more than…
single, head of household, or qualifying widow(er)		$17,500			$5,000
married filing jointly andonly one spouse qualifies in Figure A		$20,000			$5,000
married filing jointly andboth spouses qualify in Figure A		$25,000			$7,500
married filing separately and you lived apart from your spouse for all of 2017		$12,500			$3,750
* AGI is the amount on Form 1040A, line 22 or Form 1040, line 38.

 

If your AGI or your nontaxable pensions, annuities, or disability income are equal to or more than the income limits, you can’t take the credit.

Credit Figured for You

You can figure the credit yourself or the IRS will figure it for you. If you want to figure the credit yourself, skip this section and follow the instructions in Figuring the Credit Yourself , later.

If you can take the credit and you want the IRS to figure the credit for you, attach Schedule R to your return. Check the appropriate box in Part I of Schedule R and fill in Part II and lines 11, 13a, and 13b of Part III, if they apply to you.

If you file Form 1040A, enter “CFE” in the space to the left of Form 1040A, line 32. If you file Form 1040, check box c on Form 1040, line 54, and enter “CFE” on the line next to that box. Attach Schedule R to your return.

Table 2. Initial Amounts

IF your filing status is…					THEN enter on line 10 of Schedule R…
single, head of household, or qualifying widow(er)and, by the end of 2017, you were
	•		65 or older		$5,000
	•		under 65 and retired on permanent and total disability1		$5,000
married filing a joint return and by the end of 2017
	•		both of you were 65 or older		$7,500
	•		both of you were under 65 and one of you retired on permanent and total disability1		$5,000
	•		both of you were under 65 and both of you retired on permanent and total disability2		$7,500
	•		one of you was 65 or older, and the other was under 65 and retired on permanent and total disability3		$7,500
	•		one of you was 65 or older, and the other was under 65 and notretired on permanent and total disability		$5,000
married filing a separate return and you didn’t live with your spouse at any time during the year and, by the end of 2017, you were
	•		65 or older		$3,750
	•		under 65 and retired on permanent and total disability1		$3,750
		1 Amount can’t be more than the taxable disability income.
		2 Amount can’t be more than your combined taxable disability income.
		3 Amount is $5,000 plus the taxable disability income of the spouse under age 65, but not more than $7,500.

 

Figuring the Credit Yourself

To figure the credit yourself, first check the box in Part I of Schedule R that applies to you. Only check one box in Part I. If you check box 2, 4, 5, 6, or 9 in Part I, also complete Part II of Schedule R.

Next, figure the amount of your credit using Part III of Schedule R. Steps 1 through 5 in this section can help you figure this amount.

Finally, report the amount from line 22 of Schedule R on your tax return. If you file Form 1040A, enter the amount from Schedule R, line 22 on line 32. If you file Form 1040, include the amount from Schedule R, line 22 on line 54, check box c, and enter “Sch R” on the line next to that box.

There are five steps in Part III to determine the amount of your credit.

 

1. Determine your initial amount (lines 10–12).
2. Determine the total of any nontaxable social security and certain other nontaxable pensions, annuities, and disability benefits you received (lines 13a, 13b, and 13c).
3. Determine your excess adjusted gross income (lines 14–17).
4. Determine the total of Steps 2 and 3 (line 18).
5. Determine your credit (lines 19–22).

These steps are discussed in more detail next.

Step 1. Determine Initial Amount

To figure the credit, you must first determine your initial amount using lines 10 through 12. Your initial amount depends on your filing status and, if you are under age 65, the amount of your taxable disability income. Table 2shows the initial amount for each filing status. The initial amount for qualified individuals under age 65 may be less than the amount shown for a filing status; see Initial amounts for persons under age 65 next.

Initial amounts for persons under age 65.

If you are a qualified individual under age 65, your initial amount can’t be more than your taxable disability income. Your initial amount will be the lesser of the initial amount shown on Table 2 for your filing status or your taxable disability income.

Special rules for joint returns.

If you file a joint return and both you and your spouse are qualified individuals, the initial amount you report for yourself and your spouse on Schedule R will depend on whether only one of you is (or both of you are) under age 65.

If only one of you is under age 65, your initial amount can’t be more than $5,000 plus the taxable disability income of the spouse who is under age 65.

If both you and your spouse are under age 65, the initial amount for you and your spouse can’t be more than your combined taxable disability income.

Step 2. Total Certain Nontaxable Pensions and Benefits

Step 2 is to figure the total amount of nontaxable social security and certain other nontaxable payments you received during the year. You must reduce the initial amount you determined in Step 1 by these payments.

Enter these nontaxable payments on lines 13a or 13b and total them on line 13c. If you are married filing jointly, you must enter the combined amount of nontaxable payments both you and your spouse received.

Worksheets are provided in the instructions for Forms 1040 and 1040A to help you determine if any of your social security benefits (or equivalent railroad retirement benefits) are taxable.

Include the following nontaxable payments in the amounts you enter on lines 13a and 13b.

• Nontaxable social security payments. This is the nontaxable part of the benefits shown in box 5 of Form SSA-1099, Social Security Benefit Statement, before deducting any amounts withheld to pay premiums on supplementary Medicare insurance, and before any reduction because of benefits received under workers’ compensation. (Don’t include a lump-sum death benefit payment you may receive as a surviving spouse, or a surviving child’s insurance benefit payments you may receive as a guardian.)

 

• Nontaxable railroad retirement pension payments treated as social security. This is the nontaxable part of the benefits shown in box 5 of Form RRB-1099, Payments by the Railroad Retirement Board.

 

• Nontaxable pension or annuity payments or disability benefits that are paid under a law administered by the Department of Veterans Affairs (VA). (Don’t include amounts received as a pension, annuity, or similar allowance for personal injuries or sickness resulting from active service in the armed forces of any country or in the National Oceanic and Atmospheric Administration or the Public Health Service, or as a disability annuity under section 808 of the Foreign Service Act of 1980.)

 

• Pension or annuity payments or disability benefits that are excluded from income under any provision of federal law other than the Internal Revenue Code. (Don’t include amounts that are a return of your cost of a pension or annuity. These amounts don’t reduce your initial amount.)

 

You should be sure to take into account all of the nontaxable amounts you receive. These amounts are verified by the IRS through information supplied by other government agencies.

Step 3. Determine Excess Adjusted Gross Income

You also must reduce the initial amount you determined in Step 1 by your excess adjusted gross income. Figure your excess adjusted gross income on lines 14 through 17.

You figure your excess adjusted gross income as follows.

1. Subtract from your adjusted gross income (Form 1040A, line 22 or Form 1040, line 38) the amount shown for your filing status.
   1. $7,500 if you are single, head of household, or qualifying widow(er),
   2. $10,000 if you are married filing jointly, or
   3. $5,000 if you are married filing separately and you and your spouse didn’t live in the same household at any time during the tax year.
2. Divide the result of (1) by 2.

 

Step 4. Determine the Total of Steps 2 and 3

To determine if you can take the credit, you must add (on line 18) the amounts you figured in Step 2 (line 13c) and Step 3 (line 17).

Step 5. Determine Your Credit

Subtract the amount determined in Step 4 (line 18) from the initial amount determined in Step 1 (line 12), and multiply the result by 15% (0.15).

In certain cases, the amount of your credit may be limited. See Limit on credit , later.

Example.

You are 66 years old and your spouse is 64. Your spouse isn’t disabled. You file a joint return on Form 1040. Your adjusted gross income is $14,630. Together you received $3,200 from social security, which was nontaxable. You figure the credit as follows.

Example applying the 5-step process			Amount
(Line references (shown in parentheses) are to Schedule R)
1.	Initial amount (line 12)		$5,000
2.	Total nontaxable social security and other nontaxable pensions (line 13c)	$3,200
3.	Excess adjusted gross income ($14,630 − $10,000) ÷ 2 (line 17)	2,315
4.	Add (2) and (3) (line 18)		5,515
5.	Subtract (4) from (1) (line 12 – line 18 = line 19) (Don’t enter less than -0-)		$ -0-

 

You can’t take the credit because your nontaxable social security plus your excess adjusted gross income is more than your initial amount.

Limit on credit.

The amount of credit you can claim is generally limited to the amount of your tax. Use the Credit Limit Worksheet in the Instructions for Schedule R to determine if your credit is limited.

Examples

The following examples illustrate the credit for the elderly or the disabled. The initial amounts are taken from Table 2.

Example 1.

James Davis is 58 years old, single, and files Form 1040A. In 2015 he retired on permanent and total disability, and he is still permanently and totally disabled. He got the required physician’s statement in 2015 and kept it with his tax records. His physician signed on line B of the statement. This year James checks the box in Schedule R, Part II. He doesn’t need to get another statement for 2017.

He received the following income for the year.

Nontaxable social security		$1,500
Interest (taxable)		100
Taxable disability pension		11,400

 

James’ adjusted gross income is $11,500 ($11,400 + $100). He figures the credit on Schedule R as follows.

1.	Initial amount based on filing status			$5,000
2.	Taxable disability pension			11,400
3.	Initial amount (smaller of line 1 or line 2)			5,000
4.	Nontaxable social security benefits	$1,500
5.	Excess adjusted gross income ($11,500 − $7,500) ÷ 2	2,000
6.	Add lines 4 and 5			3,500
7.	Subtract line 6 from line 3 (Don’t enter less than -0-)			1,500
8.	Multiply line 7 by 15% (0.15)			225
9.	Enter the amount from the Credit Limit Worksheet in the Instructions for Schedule R, line 21			111
10.	Credit (Enter the smaller of line 8 or line 9)			$111

 

He enters $111 on line 32 of Form 1040A. The Schedule R for James Davis isn’t shown.

Example 2.

William White is 53. His wife Helen is 49. William had a stroke 3 years ago and retired on permanent and total disability. He is still permanently and totally disabled because of the stroke. In November, Helen was injured in an accident at work and retired on permanent and total disability.

William received nontaxable social security disability benefits of $2,000 during the year and a taxable disability pension of $6,200. Helen earned $13,000 from her job and received a taxable disability pension of $1,700. Their joint return on Form 1040 shows adjusted gross income of $20,900 ($6,200 + $13,000 + $1,700). They don’t itemize deductions. They don’t have any amounts that would increase their standard deduction.

Helen’s doctor completed the physician’s statement in the Instructions for Schedule R. Helen isn’t required to include the statement with their return, but she must keep it for her records.

William got a physician’s statement for the year he had the stroke. His doctor had signed on line B of that physician’s statement to certify that William had a permanent and total disability. William has kept the physician’s statement with his records. He checks the box on Schedule R, Part II and writes his first name in the space above the box on line 2.

William and Helen use Schedule R to figure their $8 credit for the elderly or the disabled. They attach Schedule R to their Form 1040 and enter $8 on line 54. They check box c on line 54 and enter “Sch R” on the line next to that box. See their filled-in Schedule R and Helen’s filled-in physician’s statement, later.

 

Instructions for Physician’s Statement

Taxpayer	Physician
If you retired after 1976, enter the date you retired in the space provided on the statement below.	A person is permanently and totally disabled if both of the following apply.
	1. He or she can’t engage in any substantial gainful activity because of a physical or mental condition.
	2. A physician determines that the disability has lasted or can be expected to last continuously for at least a year or can lead to death.
Physician’s Statement
I certify that Helen A. White
Name of disabled person
was permanently and totally disabled on January 1, 1976, or January 1, 1977, or was permanently and totally disabled on the date he or she retired. If retired after 1976, enter the date retired ▶ November 1, 2017
Physician: Sign your name on either A or B below.
A. The disability has lasted or can be expected to last continuously for at least a year
	Physician’s signature Date
B. There is no reasonable probability that the disabled condition will ever improve	Ayden D. Doctor 2/8/17
	Physician’s signature Date
Physician’s name	Physician’s address
Ayden D. Doctor	1900 Green St., Hometown, MD 20000

 

Page 1 of Schedule R for the Whites

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Page 2 of Schedule R for the Whites

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