If you figure the credit yourself, fill out the front of Schedule R. Next, fill out Part III of Schedule R. If you file Form 1040A, enter the amount from Schedule R, line 24, on line 30. If you file Form 1040, include the amount from Schedule R, line 24, on line 53, check box c,
and enter "Sch R" on the line next to that box.
Table 33-1. Initial Amounts
| || IF your filing status is ... || || THEN enter on line 10 of Schedule R... |
| || single, head of household, or qualifying widow(er) with dependent child and, by the end of 2009, 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 2009|| || |
| || ||• 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 not retired on permanent and total disability||$5,000|
| || married filing a separate return and you did not live with your spouse at any time during the year and, by the end of 2009, you were|| || |
| || ||• 65 or older||$3,750|
| || ||• under 65 and retired on permanent and total disability1 ||$3,750|
| 1Amount cannot be more than the taxable disability income.|| |
| 2Amount cannot be more than your combined taxable disability income.|| |
| 3Amount is $5,000 plus the taxable disability income of the spouse under age 65, but not more than $7,500.|| |
There are five steps in Part III to determine the amount of your credit:
- Determine your initial amount (lines 10–12).
- Determine the total of any nontaxable social security and certain other nontaxable pensions and disability benefits you received (lines 13a, 13b, and 13c).
- Determine your excess adjusted gross income (lines 14–17).
- Determine the total of Steps 2 and 3 (line 18).
- Determine your credit (lines 19–24).
These steps are discussed in more detail next.
To figure the credit, you must first determine your initial amount using lines 10 through 12. See Table 33-1
. Your initial amount is on line 12.
If you are a qualified individual under age 65, your initial amount cannot be more than your taxable disability income.taxmap/pub17/p17-177.htm#en_us_publink1000174509
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 your initial amount by these payments.
Enter these nontaxable payments on lines 13a or 13b, and total them on line 13c. If you are married filing a joint return, you must enter the combined amount of nontaxable payments both you and your spouse receive.
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, which includes disability benefits, before deducting any amounts withheld to pay premiums on supplementary Medicare insurance, and before any reduction because of benefits received under workers' compensation. (Do not 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). (Do not 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. (Do not include amounts that are a return of your cost of a pension or annuity. These amounts do not 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.
You also must reduce your initial amount by your excess adjusted gross income. Figure your excess adjusted gross income on lines 14–17.
You figure your excess adjusted gross income as follows:
- Subtract from your adjusted gross income (Form 1040, line 38 or Form 1040A, line 22) the amount shown for your filing status in the following list.
- $7,500 if you are single, a head of household, or a qualifying widow(er),
- $10,000 if you are married filing a joint return, or
- $5,000 if you are married filing a separate return and you and your spouse did not live in the same household at any time during the tax year.
- Divide the result of (1) by 2.
To determine if you can take the credit, you must add (on line 18) the amounts you figured in Step 2 and Step 3.
| IF the total of Steps 2 and 3 is ... || || |
| equal to or more than the amount in Step 1|| ||you cannot take the credit.|
| less than the amount in Step 1|| ||you can take the credit.|
If you can take the credit, subtract the amount determined in Step 4 (line 18) from the amount determined in Step 1 (line 12) and multiply the result by 15%.
In certain cases, the amount of your credit may be limited. See Limit on credit
You are 66 years old and your spouse is 64. Your spouse is not 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:
|Applying the 5 Step Process|| ||Amount|
|1)||Initial amount|| ||$5,000|
|2)||Total of social security and|
other nontaxable pensions
| ||$3,200|| || |
|3)||Excess adjusted gross income|
($14,630 − $10,000) ÷ 2
| || 2,315 || || |
|4)||Add line 2 and line 3|| || || || 5,515 |
|5)||Subtract line 4 from line 1|
(Do not enter less than -0-)
| || -0- |
You cannot take the credit because your nontaxable social security (line 2) plus your excess adjusted gross income (line 3) is more than your initial amount (line 1).taxmap/pub17/p17-177.htm#en_us_publink1000174520
The amount of credit you can claim is generally limited to the amount of your tax. For more information, see the instructions for Part III, Schedule R.taxmap/pub17/p17-177.htm#en_us_publink1000174521
The following example illustrates the credit for the elderly or the disabled. The initial amount is taken from Table 33-1
, shown earlier.
James Davis is 58 years old, single, and files Form 1040A. In 2004 he retired on permanent and total disability, and he is still permanently and totally disabled. He got the required physician's statement in 2004, and kept it with his tax records. His physician signed on line B of the statement. This year James checks the box in Part II of Schedule R. He does not need to get another statement for 2009.
He received the following income for the year:
|Nontaxable social security||$1,500|
|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|| ||$5,000|
|2)|| ||Taxable disability pension|| ||11,400|
|3)|| ||Smaller of (1) or (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|
(Do not enter less than -0-)
| || 1,500 |
|8)|| ||Multiply line 7 by 15% (.15)|| ||225|
|9)|| ||Enter the amount from Form 1040A, line 28||216|| || |
|10)|| ||Enter any amounts from Form 1040A, line 29|| -0- || || |
|11)|| ||Subtract line 10 from line 9|| || || 216 |
(Enter the smaller of line 8 or line 11)
| || || $216 |
His credit is $216. He enters $216 on line 30 of Form 1040A. The Schedule R for James Davis is not shown.