Elderly and Disabled Credit: Income Limits

You may be able to claim the elderly and disabled tax credit if you are either 65 years of age before the close of the tax year or under age 65, but are retired and were permanently and totally disabled when you retired (If you are married, you must file a joint return to claim the credit unless you and your spouse did not live together at any point during the year.

The credit is computed on Schedule R of Form 1040 and 1040A.

The credit is 15 percent of an applicable initial amount based on an individual's filing status and reduced by certain income. For individuals age 65 or older, the applicable initial amount is as follows:

For permanently and totally disabled individuals under age 65, the applicable initial amount can not be more than the amount of disability income recieved during the year. In addition, there are special rules that apply for married couples that file jointly when both spouses qualifiy for the credit and one (or both) of them is under age 65.

This initial amount is then reduced by amounts received as pension, annuity, or disability benefits that are excluded from gross income. However, the credit amount isn't reduced for amounts received for Veterans Affairs pensions, annuities or disability benefits for personal injuries or sickness.

If there is any amount remaining after the first reduction, the remaining amount is further reduced by one-half of the excess of your adjusted gross income (AGI) over the following levels, based upon your filing status: