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Thread: Tax Credit for elderly and/or disabled....maybe of use to someone?

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    Distinguished Community Member Lazarus's Avatar
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    Default Tax Credit for elderly and/or disabled....maybe of use to someone?

    Living on Social Security? Here's a Tax Credit Just for You

    Motley Fool
    Wendy Connick, The Motley Fool
    Motley FoolDecember 31, 2017
    If you're among the 23% of married retirees or the 43% of single retirees who rely on Social Security for 90% or more of their income, then you likely qualify for the Credit for the Elderly or the Disabled -- a tax credit that can save you thousands of dollars every year. For that matter, even retirees with other sources of income may qualify for this tax credit. Here's how to find out if you're one of them.

    Requirements for the Credit for the Elderly or the Disabled

    The Credit for the Elderly or the Disabled is intended for two different groups of people -- and you've probably already guessed who they are based on the name of the credit. You can qualify for this credit if you're either 65 or older by the end of the year, or you're younger than that and you retired early on permanent and total disability.

    Elderly woman sitting at table holding her face up with her hand
    Elderly woman sitting at table holding her face up with her hand
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    Image source: Getty Images.

    You'll also need to meet certain income limits to qualify for the credit. There are two different sets of income limits: one that looks at your adjusted gross income (AGI) for the year and one that looks at the total of your nontaxable Social Security benefits, pensions, annuities, and disability income. If you meet both of these income limits, you can qualify for the credit. Here are the limits for 2017:

    Filing Status
    AGI Limit
    Nontaxable Income Limit
    Single, head of household, or qualifying widow(er)
    $17,500
    $5,000
    Married filing jointly and only one spouse qualifies
    $20,000
    $5,000
    Married filing jointly and both spouses qualify
    $25,000
    $7,500
    Married filing separately (only if you lived apart from your spouse for the whole year)
    $12,500
    $3,750
    How the income limits work

    It's possible to have quite a lot of nontaxable income in retirement if you're lucky enough to have an employer-provided pension or an annuity purchased with post-tax funds. Because the Credit for the Elderly or the Disabled is meant for low-income retirees, the IRS doesn't want to hand it out to people with loads of nontaxable income. Therefore it splits the income limits for this credit into two parts: one that looks at a retiree's total taxable income and another that looks at certain types of nontaxable income.

    Your gross income is the total taxable income you received for the year; adjusted gross income is your gross income minus certain adjustments. For example, you'd subtract student loan interest, tuition and fees, and alimony payments from gross income to arrive at your AGI for the year. You'll find your AGI on line 21 of Form 1040A and line 37 of Form 1040.

    The nontaxable income limit includes the nontaxable part of your Social Security benefits plus any nontaxable pension, annuity, or disability income you received during the year. Interestingly, this limit does not include distributions from any Roth accounts you possess.

    How to claim the credit

    To claim the Credit for the Elderly or the Disabled, you'll need to fill out Schedule R and use Form 1040 or Form 1040A for your tax return (not 1040EZ). The maximum amount you can claim ranges from $3,750 to $7,500 depending on your filing status. There's a worksheet on Schedule R that you can use to calculate the amount of your credit. You can also ask the IRS to calculate your credit for you. Note that this is a nonrefundable credit: It cannot exceed the amount you owe in taxes for the year, so it can't get you a refund check (or increase the refund you're already getting).

    If you decide you want the IRS to calculate the credit for you, you'll need to complete Part I and (if you're disabled) Part II of Schedule R, along with lines 11 and 13 from Part III. If you use a Form 1040A for your tax return, write "CFE" to the left of line 32; if you use Form 1040 instead, check box "c" on line 54 and write "CFE" on the line next to that box. If you use Schedule R to calculate the amount of your credit, write "Schedule R" instead of "CFE" on those lines on your 1040 return and enter the amount from line 22 of Schedule R.
    Linda~~~~

    Be the kind of woman that when your feet hit the floor each morning the devil says:"Oh Crap, She's up!"

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    Distinguished Community Member agate's Avatar
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    This should be useful for those who qualify. I hope the tax reform that is happening won't change this.
    MS diagnosed 1980. Avonex 2002-2005. Copaxone 6/07 - 5/10.
    Member of this MS board since 2001.

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    Distinguished Community Member Jeanie Z's Avatar
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    :) My income is under the minimum to have to file still so I do not need to file. I did not file the last two years.

    Three years ago when I went to the tax lady she told me she was retiring and that in the future I did not need to file because I fell below the minimum to have to file. Guess what? For several years she had done my taxes and charged me $130.00 and my income was the same so I did not need to file all those years. I was mad!

    She was at H&R Block. They should have to give me all the fees I paid them. I wish I had thought to call the IRS and find out that I did not need to file. Jeanie :)

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    Distinguished Community Member BBS1951's Avatar
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    Call HR Block and ask for a partial refund. Worse case scenario they say Nope

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